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do not relieve the taxpayer from the need to satisfy its burden
of proof.
Income is taxed to the person who earned it. Lucas v. Earl,
281 U.S. 111 (1930). The sole issue in dispute is how petitioner
should report taxable income generated by foreign trade shows
held after December 31, 1994. According to the stipulation of
the parties and the terms of the royalty agreement, petitioner
was supposed to receive 25 percent of gross receipts and pay its
direct expenses out of these receipts, and ECI was supposed to
receive the remaining 75 percent of gross receipts and make
payments to Crocus and to Expocentr and other pavilion lessors in
the former Soviet Union. Inasmuch as the parties have stipulated
that the royalty agreement is to be disregarded for Federal
income tax purposes, the question is whether petitioner is
entitled to exclude or deduct from gross income of foreign trade
shows conducted after December 31, 1994, any amounts in excess of
Crocus’s and petitioner’s direct expenses and Expocentr rent
payments, which, the parties have stipulated, petitioner is
entitled to deduct in computing its taxable income for the
periods at issue.
Petitioner contends Comtek and Crocus were in a joint
venture or a series of joint ventures to conduct the foreign
trade shows during the taxable periods at issue. Petitioner
further contends that joint venture profits should be split
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