Berger Chevrolet, Inc. - Page 12

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            on the installment agreement requires its explanation by a                                  
            salesman or a manager.  And it seems clear that a dealership                                
            offering credit insurance would take such service into account in                           
            some manner in compensating an employee for explaining to                                   
            customers the nature of the insurance coverage and calculating                              
            its cost for customers, as well as arranging for the financing of                           
            the very cost of the credit insurance itself.                                               
                  The expenses are also "necessary".  As we have noted,                                 
            virtually all motor vehicle dealerships offer credit insurance.                             
            And, as we have also noted, the installment sale purchase                                   
            agreements offer the option for credit insurance.  To keep up                               
            with their competitors, and to offer one stop service for                                   
            financing, the dealerships must have employees who can explain                              
            the function of credit insurance to customers and who are able to                           
            calculate the premiums.  Paying commissions to the managers is an                           
            "appropriate and helpful" step in achieving those objectives.                               
            Cf. Nichols Loan Corp. v. Commissioner, 321 F.2d 905 (7th Cir.                              
            1963), revg. T.C. Memo. 1962-149.                                                           
                  The Government relies on an artificial distinction between                            
            the dealerships and the related agencies.  According to the                                 
            Government, the compensation (or commissions) paid to the                                   
            managers constitutes an expense of the dealer-related agencies,                             
            not of the dealerships.  Accordingly, the argument continues, the                           
            dealerships are not entitled to a deduction unless they can show                            
            that compensating the managers results in a direct and tangible                             

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