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warranted. Kean v. Commissioner, 469 F.2d 1183, 1187-1188 (9th Cir.
1972), affg. on this issue and revg. on another issue 51 T.C. 337,
343-344 (1968). It appears that Mr. Clark could have been
subpoenaed by either petitioners or respondent. Accordingly, we
draw no inference from the fact that neither party subpoenaed Mr.
Clark.
Nonetheless, several aspects of the relationship between
Powertex, SCS, and Mr. Clark cause us to scrutinize the
relationships between them. During 1983, Mr. Clark negotiated and
executed the license agreement between Powertex and Sea-Land.
During 1983, he also authorized Sea-Land to give free freight to
Powertex for shipment of its liners. Mr. Clark also incorporated
SCS in 1983 and entered into the "consulting agreement" between SCS
and Powertex. The "consulting agreement" provides that SCS will
provide "technical expertise in the manufacturing, marketing and
sale of the Sea Bulk units". Mr. Podd, however, admitted that Mr.
Clark had no experience in the liner industry and that his expertise
was in the refrigerated container industry.
Mr. Clark left Sea-Land during 1992, and, within 3 months, the
free freight arrangement for shipment of Powertex liners was
terminated by Sea-Land. The Sea-Land lawsuit filed in 1995
describes the payments required by the "consulting agreement" as
bribes or kickbacks and contends that all of Mr. Clark's activities
with regard to Powertex were undertaken in his capacity as an
employee of Sea-Land. A deduction for a kickback has been allowed
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