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In the notice of deficiency for 1978 respondent increased
petitioner's income from Pioneer by $84,293.45. The 1978 CTC
receipts journal notes receipt from Pioneer of $84,293.45. Of
this amount $50,576.07 is recorded as commissions to Diesel
Power, and $33,717.38 is recorded as commissions to CTC.
Q. Galion
Diesel Power and the Galion Iron Works & Manufacturing
Company (Galion) had a direct buyer-seller relationship prior to
the years at issue. Galion sold equipment to Diesel Power by
means of time drafts whereby Diesel Power would resell the Galion
equipment to its customers and, with the payments from those
customers, pay Galion for the time drafts. Diesel Power
defaulted at one point on these time drafts. Mr. Khalatbari, as
managing director of Diesel Power, negotiated and signed an
agreement dated July 28, 1969, between Galion and Diesel Power
restructuring the debt due from Diesel Power to Galion.
Petitioner, as director, officer, and principal shareholder of
Diesel Power, guaranteed payment under the provisions of the
agreement. Neither Mr. Khalatbari nor Diana Zand gave a similar
personal guarantee. Shortly thereafter, in a document dated
December 1, 1969, an export, distributor, sales and service
agreement was executed. The cover page states that the agreement
was between Diesel Power and Galion, but the signature page
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