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AICR contract, both of which were entered into before the
Contract, showed W&H’s understanding of the uses of graduated
mailing fees.
The market, as exemplified by Herge’s sample of fundraising
contracts, provided two significant checks on excessive
compensation in no-risk situations--early termination rights for
the exempt organization (almost all the contracts) and graduated
mailing fee (five contracts). Until the April 1986 agreement,
the Contract did not provide either of these checks on the effect
of high mailing fees, thereby reducing the market justification
for charging what Watson acknowledged to be equal to the highest
rates in the Washington, D.C. area.
Although our inquiry in the instant case is to some extent
similar to that in section 162(a)(1) cases, this inquiry is
easier in one important respect--if we determine that there is
excess compensation in a section 162(a)(1) case, then we must set
a dollar amount on that excess, while in the instant case we
merely have to determine whether there is excess compensation and
need not then set a dollar amount. Airlie Foundation, Inc. v.
United States, 75 AFTR 2d 95-2068, 95-2070, 95-1 USTC par. 50279
(D.C. Cir. 1995); Orange County Agr. Soc., Inc. v. Commissioner,
893 F.2d 529, 534 (2d Cir. 1990), affg. T.C. Memo. 1988-380; see
Church of Scientology of California v. Commissioner, 823 F.2d
1310, 1316 (9th Cir. 1987), affg. 83 T.C. 381, 491-492 (1984);
Founding Church of Scientology v. United States, 412 F.2d at
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