- 11 -
978 F.2d 1139, 1144-1147 (9th Cir. 1992), affg. in part, revg. in
part and remanding on other issues T.C. Memo. 1991-144. In the
present case, however, we need not consider two separate
positions because there is no indication that respondent's
position changed or that respondent became aware of any
additional facts that rendered his position any more or less
justified between the issuance of the notice of deficiency and
the filing of the answer to the petition.
Respondent determined in the notice of deficiency that
petitioner was not entitled to a royalty expense deduction for
the Contested Payments. As we understand respondent's position,
respondent would not have disallowed the deduction if petitioner
had directly paid the Contested Payments to Domino's. Respondent
disallowed the royalty expense deduction based on "the conduct of
the parties"; i.e., the fact that petitioner made the Contested
payments to Mr. Paul, and respondent's interpretation of the Area
Agreement. The deduction was disallowed because respondent
determined that petitioner was the implied assignee of the Area
Agreement and therefore possessed a fixed and unconditional right
to reimbursement for the Contested Payments under that agreement.
Finally, respondent concluded that any payments made to Mr. Paul
were simply constructive dividends.
Even in light of the fact that petitioner made the Contested
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011