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Several factors contradict petitioners’ assertion that
Menards and TMI made an oral sponsorship agreement pursuant to
which Menards would pay certain TMI expenses in exchange for
sponsorship benefits. First, TMI did not report on its tax
return or record in its books and records any sponsorship income
from Menards, with the possible exception of $45,000 for TYE
1998. Second, TMI reported income from its other sponsors on
both its tax return and sponsorship income reports. Third,
instead of creating separate accounts in its books and records
identifying the TMI expenses as sponsorship fees or advertising
expenses, Menards commingled the payments made on TMI’s behalf
with Menards’s other business expenses. Fourth, the only
explanation provided for Menards’s accounting method was that
Menards “had historically done that * * * and * * * [Menards]
continued that practice of what * * * [it] had done in the past.”
Fifth, when Menards deducted the TMI expenses on its tax returns,
Menards did not identify the deductions as sponsorship fees or
advertising expenses.
4. Conclusion
The record contains no credible evidence of an oral
sponsorship agreement between Menards and TMI. Moreover, the
56(...continued)
Memorandum Opinion of this Court dated Feb. 18, 1954; Weiss v.
Commissioner, 221 F.2d 152, 156 (8th Cir. 1955), affg. T.C. Memo.
1954-51; Schroeder v. Commissioner, T.C. Memo. 1986-467.
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