Jerry S. Payne - Page 13

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          reflected on the WAs.  The only evidence relating to the                    
          characterization of the amounts reflected on the WAs as either              
          constructive dividends to petitioner or deductible promotional              
          expenses consists of the WAs themselves and petitioner’s oral               
          testimony.  As discussed, infra, in section II, our decision that           
          most of the WAs provided for and generated deductible promotional           
          expenses is based solely upon those WAs, which are stipulated               
          joint exhibits.  The issue, as framed by the parties, is the                
          extent to which the stipulated WAs either support or refute                 
          petitioner’s oral testimony that all of the WAs authorized and              
          resulted in the expenditure of amounts deductible by 2618 as                
          promotional expenses, and we ultimately find that all but 12 WAs            
          for 1989 and 7 WAs for 1990 (out of a total of 280 for 1989 and             
          177 for 1990), are consistent with and, therefore, support                  
          petitioner’s position.  On that basis, we sustain respondent’s              
          proposed adjustment only to the extent of the amounts reflected             
          in those 12 WAs for 1989 and 7 WAs for 1990.  With respect to               
          those 19 WAs, we find that the notations thereon are more                   
          consistent with the conclusion that such amounts were distributed           
          to petitioner for his personal use rather than for any                      
          deductible, business-related purpose.                                       
                    2.  Liquidating Dividend Issue                                    
               After respondent’s concession as to the amount of any                  
          liquidating dividend, there are two issues for decision:  an                

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