Ronald I. and Lois B. Koenig - Page 7

                                        - 7 -                                         

               In connection with the sale of Harmony Foods to Glico,                 
          petitioner, Harmony Foods, and MEI entered into an agreement                
          accelerating the amounts due as minimum commission and noncompete           
          payments.  Before the sale of Harmony Foods to Glico, petitioner            
          received $200,000 as commissions pursuant to paragraph 4.B of the           
          employment agreement and $500,000 in noncompete payments.                   
               During June, July, and August 1990, petitioner attempted to            
          collect additional commissions.  When he contacted MEI he was               
          told to speak with Glico, and when he contacted Glico, he was               
          told to speak with MEI.  In mid-December 1990, petitioner was               
          informed during a meeting with Yasuaki Aoki, the Chief Executive            
          Officer of Glico, that Glico would not make any further payments            
          to him pursuant to paragraph 4.B of the employment agreement.               
          Petitioner's employment with Glico was terminated shortly after             
          this meeting.                                                               
               Petitioners claimed a $500,000 bad debt deduction on a                 
          Schedule C attached to their 1990 Federal income tax return based           
          on petitioner's failure to receive any more than $200,000                   
          pursuant to paragraph 4.B of the employment agreement.3                     
          Respondent disallowed the deduction.  We agree with respondent.             



               3    Petitioner did not claim the entire $700,000 difference           
          between the minimum payment received and the maximum payment                
          allowable because at that time he believed he might be able to              
          collect additional commission payments.                                     




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011