- 85 -
sponsorship designation with respect to the Tony Stewart car and
less prominent logo placement on the Robbie Buhl car. The
$200,000 increase from the 1997 sponsorship fee may have been
partly attributable to Tony Stewart’s winning the IRL
Championship in 1997. Because the record does not indicate how
much Johns Manville paid to sponsor the Robbie Buhl car in 1998,
but TMI as a team shared the prestige of the 1997 IRL
Championship win, we assume that the Robbie Buhl car sponsorship
fee increased at least half as much in proportion to the increase
in the Tony Stewart car sponsorship fee. Accordingly, we
attribute a sponsorship fee value of $1,583,333 to Johns
Manville’s primary sponsorship of the Robbie Buhl car.69
On the basis of the record, we conclude that, to the extent
Menards’s payment of the TMI expenses equaled the combined 1997
primary sponsorship fees paid by Glidden and Quaker State and the
combined 1998 primary sponsorship fees paid by Glidden and Johns
Manville, the TMI payments were reasonable in amount and
deductible pursuant to section 162(a). As a result, for TYE
1998, Menards may deduct as advertising expenses a prorated
69We calculated the value as follows: $200,000/1,800,000 =
.111111; .111111/2 = .055555; .055555 x 1,500,000 = $83,333;
1,500,000 + 83,333 = $1,583,333]
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