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advertisements in the Guatemalan mail, the taxpayer “derived a
substantial benefit not otherwise available”, which ultimately
generated much of the taxpayer’s revenues that year. The
taxpayer’s payment of the inbound expenses had a direct nexus
with the taxpayer’s business. Id.
Petitioners assert that Menards’s primary motive for paying
the TMI expenses was to promote Menards’s business and that a
direct nexus existed between the purpose of the TMI payments and
Menards’s business. Although there was no oral sponsorship
agreement between Menards and TMI, this case is similar to JRJ
Express, Inc. in that the taxpayer received a benefit in return
for paying the other corporation’s expenses. In TYE 1998,
Menards paid the TMI expenses and, for no additional fee,
received Indy race car sponsorship benefits, which, like the
benefits in JRJ Express, Inc., were advertising and promotional
benefits.
Indy racing may not be the only form of advertising
available to Menards for targeting potential customers, but
participation in motor sports is an innovative and exciting
method for generating local, national, and international
publicity for Menards’s business. Menards’s competitors’
decisions to become involved in motor sports also highlights its
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mailing list” through advertising stuffed in the inbound mail.
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