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In this case, petitioners have offered no evidence to
support their alternative argument that the value-added payments
were really dividends paid with respect to their MCP stock. In
fact, the record contains compelling evidence against
petitioners’ argument. For example, MCP’s articles of
incorporation provided that “No dividends shall be paid on the
common stock of this association” and permitted noncumulative
dividends, which could not exceed a specified percentage, only
with respect to MCP’s preferred stock.18 The articles also
provided that “All net proceeds (savings) of this association in
excess of dividends, if any, shall be distributed to patrons
annually or oftener on the basis of patronage”. These provisions
reinforce other evidence in the record that establishes the
value-added payments were paid in consideration for the quantity
of business petitioners conducted with MCP. The value-added
payments were calculated on the basis of the corn petitioners
acquired and delivered to MCP during 1994 and 1995.
On the evidence before us, we conclude that the value-added
payments were paid with respect to and as additional
consideration for the corn petitioners acquired, delivered to
MCP, and sold; they were not paid with respect to petitioners’
MCP stock. We hold, therefore, that the value-added payments are
18Petitioners did not own any of MCP’s preferred stock
during the years at issue.
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