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Diesel Power. The letter requests that the balance of the
commission due be transferred to CTC. A 1975 Galion letter to
one of its European affiliates states that, while the affiliate
had provided commission funds directly to Diesel Power on certain
past shipments, this procedure was "contrary to Caspian Trading's
instructions to us. Mr. Zand called me the other day and advised
me of this." The letter further stated that the correct
procedure was to credit the affiliate's books in the name of
Diesel Power, send a copy of the credit to CTC, and "Await
notification from Caspian as to when and how dispersement is to
be made." This letter shows that a copy was sent to petitioner
but does not show that a copy was sent to Diesel Power.
Petitioner's control over the earning of commissions also is
reflected in a 1976 memo to the Galion file, which states:
Mr. Zand suggested and Farshid graciously agreed that
Caspian retain 100 percent of the profit on the Galion * * *
parts and engine orders yearly until such time as Caspian
covers their overhead. Once Caspian's overhead is
satisfied, then the division is Caspian 75 percent and
Diesel Power 25 percent.
R. Payments by Galion
In the notice of deficiency for 1973 respondent determined
that there was unreported "Per books" income from Galion in the
amount of $170,798.84 and "Other" income from Galion of
$2,368.24. During the taxable year 1973 Galion issued checks
payable to CTC totaling $284,664.74, all of which were deposited
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