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when the payments were not shown by the Commissioner to be illegal
and the taxpayer established that the payments were ordinary and
necessary business expenses. See Brizell v. Commissioner, supra.
In the instant case, however, petitioners consistently characterize
the payments to SCS as consulting fees, and they do not contend that
the payments are deductible as legal kickbacks. Moreover, even had
they made such a contention, they have failed to produce any
evidence which would suggest that kickbacks are normal and customary
in the container liner industry. See id. at 157 (kickbacks found to
be ordinary within the meaning of section 162(a) where the record
contained ample evidence that such payments were common in the
printing industry); Frederick Steel Co. v. Commissioner, 42 T.C. 13
(1964), revd. on other grounds 375 F.2d 351 (6th Cir. 1967)
(commercial bribes not ordinary because there was no reliable
evidence that other similar arrangements or practices were common in
the industry); United Draperies, Inc. v. Commissioner, 41 T.C. 457
(1964), affd. 340 F.2d 936 (7th Cir. 1964) (taxpayer failed to show
that it normally made such payments or that such payments were
commonly made in the industry).
Based on the record before us, we conclude that petitioners
have not established that Mr. Clark (individually or through SCS)
provided any services to Powertex beyond those he provided in his
capacity as an employee of Sea-Land. Consequently, we hold that
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