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The result of our holdings is that petitioner is entitled to
deduct 30.6 percent and 33.8 percent, respectively, of the
stipulated net profits of the foreign trade shows for the 7
months ended July 31, 1995, and the fiscal year ended July 31,
1996, as compensation to Crocus.
In summary, we hold that petitioner and Crocus were not
engaged in a joint venture during the taxable periods at issue;
petitioner must therefore report all revenues from foreign trade
shows collected by petitioner or ECI during the taxable periods
at issue. Petitioner may deduct its direct expenses, the
Expocentr rent expenses, and Crocus’s reimbursed direct expenses,
all in accordance with the stipulation of the parties.
Petitioner is also entitled to deduct the amount of fees
collected by Crocus during the taxable periods at issue from
exhibitors located in the former Soviet Union as reasonable
compensation to Crocus for its services in operating the foreign
trade shows.
To give effect to the foregoing,
Decision will be entered
under Rule 155.
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