- 11 -
Gifts for the use of undesignated members of a
large group are not considered indirect gifts to
individuals; thus, one distinguishing factor lies in
the provider’s knowledge about the ultimate recipient
of the gift. But the heart of the distinction being
made is that payments for gifts to be made by and in
the sole discretion of some other business entity are
not treated as “gifts to individuals” by the payor in
the first instance. * * * [World Wide Agency, Inc. v.
Commissioner, T.C. Memo. 1981-419.]
Applying these precepts to the matter at hand, we conclude
that petitioners have failed to establish that the gift
certificates were given to undesignated and unknown members of a
large group in the sole discretion of the receiving entity. The
record before us lists only the name of each corporate recipient
and the corresponding sales volume generated by that customer.
We thus are unable to determine that the entities were not small,
closely held corporations with few employees. Even a significant
sales volume tells us little about the underlying corporate
structure or relationships. We also note that R&J chose to give
a second certificate to 9 of the 28 enumerated customers for
reasons that apparently bear no correlation to sales volume.
Those customers ranked first, fourth, fifth, seventh, eleventh,
fifteenth, seventeenth, twenty-second, and twenty-third in terms
of decreasing sales volumes were selected to receive two
certificates. This could support an inference that R&J expected
or intended particular persons to be awarded the gift
certificates and felt that two individuals in certain
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011