- 33 -
F.O.B. Price
per unit Commission
$0 - $3.99 $.25
4 - 5.99 .35
6 - 7.99 .45
8 and up .55
Agro was responsible for all costs associated with growing,
harvesting, packing, and delivering the green onions to Fresh
Choice.
In the agreement, Fresh Choice agreed to perform all the
work of transporting, receiving, storing, loading, distributing,
and selling the green onions grown by Agro, to collect the sales
proceeds, and to provide technical assistance. It served as
importer of record of the green onions.
Fresh Choice also agreed to advance working capital funds,
and, for that purpose, it provided a line of credit to Agro for
which it received interest on loans against that line of credit.
Vessey also provided financing for the joint venture.
Audit Determination
On audit, respondent determined that the 55-cent-per-box
commission rate petitioner received from the Canelos growers did
not constitute an arm's-length charge. Consequently, respondent
increased petitioner's income for commissions from the Canelos
growers by the following amounts:
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