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perform for the otros growers. In 1989 and 1990, petitioner made
payments of $50,000 and $100,000 to Mr. Cecilio Espinosa (Mr.
Espinosa), an employee of the Canelos brothers, or an entity
controlled by them other than petitioner. Those payments were
related to his activities in managing Canelos growers located in
the Baja. According to Dr. Frisch, as a marketer, petitioner
would not have made such payments to an employee of an unrelated
group of growers (and did not make such payments to the otros
growers).
Dr. Frisch stated that the adjustments he made improved the
comparability of the otros growers' commissions and the Canelos
growers' commissions by accounting for the latter two differences
in the transactions between petitioner and the Canelos growers
and petitioner and the otros growers. He calculated that an
arm's-length commission for petitioner for the years in issue
would have been 94 cents when expressed as a per-package rate, or
11.06 percent when expressed as a percentage of sales.
Accordingly, Dr. Frisch concluded that petitioner's commissions
for the years in issue in total would have been $7,030,000 higher
had petitioner been treated in an arm's-length fashion by the
Canelos growers. His calculation of the increase in commission
income for each year is as follows:
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