JRJ Express Incorporated, A California Corporation, d.b.a. King Express International - Page 11

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          satisfied that the lack of current customer addresses would have            
          represented a "clear proximate danger" to petitioner's business.            
               Petitioner has also satisfied us that its "ultimate purpose"           
          in paying the expenses in question was to "protect or promote" its          
          delivery service from the United States to Guatemala, rather than           
          to benefit the Guatemalan companies.  Although the disputed                 
          expenses related to the deliveries of packages from Guatemala to            
          the United States which was the business of the Guatemalan                  
          companies, petitioner derived a substantial benefit not otherwise           
          available through the insertion of advertisements and other                 
          materials of its business into the envelopes originating from               
          Guatemala.  The "stuffing" of these materials had a direct nexus            
          with petitioner's U.S.-Guatemala delivery business--the materials           
          provided targeted potential customers with instructions on sending          
          envelopes and small packages from the United States to Guatemala.           
          A large percentage of petitioner's revenues for the year in issue           
          came as a result of the flow of envelopes originating in Guatemala.         
          It cannot be overemphasized that the promotional and marketing              
          process was the centerpiece of petitioner's business.  Thus, we             
          conclude that there was a direct nexus between the payment of the           
          expenses in dispute and petitioner's outbound delivery business.            
               In applying the second prong of the Lohrke test, we are                
          satisfied that the expenses in dispute were appropriate in                  
          promoting petitioner's business.  Petitioner did not specifically           
          deduct "inbound expenses"--the expenses in dispute.  Rather,                



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