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and the taxpayer and the insurance company would not and did not
share in any losses resulting from the sale of the new type of
policy.
Disregarding ECI and the royalty agreement, petitioner is
the only party with a proprietary interest in the
profit-producing activity of promoting and operating the foreign
trade shows during the periods at issue. Crocus’s retention of
fees collected from exhibitors located in the former Soviet Union
does not, by itself, result in a joint venture. It may fairly be
inferred from the stipulated record that Crocus was reimbursed
for its direct expenses only, not its overhead expenses. See
supra pp. 25-26. Although Crocus was subject to the risk of loss
of its unreimbursed overhead expenses, Crocus’s risk of loss is
trivial as compared with petitioner’s risk of loss arising from
its liability for the substantial Expocentr rent obligations in
addition to its own direct expenses. The facts as a whole
suggest Crocus was not a coproprietor because it did not share in
possible losses of substantial Expocentr rent obligations or
petitioner’s direct expenses, did not negotiate the trade show
contracts or cooperation agreement with Expocentr and contracts
with exhibitors located outside the former Soviet Union, and did
not own any rights to foreign trade show profits.
This Luna factor weighs against the finding of a joint
venture between petitioner and Crocus during the taxable periods
at issue.
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