GAC Produce Co., Inc., An Arizona Corporation - Page 5




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         Productora ABC (Productora).3  The parties stipulated that Mr.                
         Canelos controlled petitioner and the Canelos growers within the              
         meaning of section 1.482-1(a)(3) through (5), Income Tax Regs.                
         The Canelos growers have been distributing produce in Mexico for              
         almost as long as they have been distributing produce in the                  
         United States, and the Canelos growers have established                       
         relationships with Mexican buyers.  They operated out of Mr.                  
         Canelos' main office in Culiacan, Sinaloa, Mexico.  Hereinafter,              
         we will refer to petitioner and the Canelos growers collectively              
         as the Canelos group; to Mr. Canelos and his brother Constantino              
         Canelos Rodriguez (Constantino) collectively as the Canelos                   
         brothers; to the Canelos brothers and members of their families               
         collectively as the Canelos family; and to the Canelos family and             
         their related businesses collectively as the Canelos                          
         organization.  The Canelos organization functioned as a                       
         vertically integrated operation with farming, packing, and                    
         trucking operations in Mexico and sales and distribution                      
         operations in the United States.                                              
              For the years in issue, the Canelos growers' produce sales               
         accounted for 98.76 percent, 99.28 percent, 89.24 percent, and                
         95.87 percent, respectively, of petitioner's total sales.                     


               3Although the entities under which the Canelos growers                  
          operated changed names during the years in issue, the majority of            
          the members remained the same.                                               




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Last modified: May 25, 2011