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Respondent did not explain the basis or standard used to
determine whether a given item would be included in the purchases
for which a deduction was allowed in 1991 or 1992. The agent did
not attempt to account for beginning and ending year inventories.
It appears to the Court, however, that the agent, having
confirmed that the goods acquired for the buyers group were
distributed to the members at cost, allowed a deduction for items
identified as purchases made for the buyers group. Consistent
with that determination, we shall allow a deduction for purchases
made for the buyers group. Additionally, we shall allow a
deduction for payments unrelated to the buyers group but
attributable to sales or transactions completed during the
taxable year at issue.
1. Klein News
Klein News is a distributor of magazines. In 1990, Raymond
agreed to provide metal racks to hold plastic pages, sleeves, and
hard plastic for sports cards for Klein News. Klein News agreed
to purchase between $20,000 and $25,000 worth of merchandise per
month. On December 26, 1990, Raymond wrote a check in the amount
of $24,048.85 made payable to Ohio Coin for payment of
merchandise bought from Ohio Coin related to the deal with Klein
News. In 1991, Raymond sold merchandise to Klein News for
$23,987.46, the payment for which was deposited into the
Ameritrust account on February 1, 1991.
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