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instead, petitioner had reported the full $2.5 million fee and
claimed a $2 million business deduction with respect to the
portion paid to CKH.
Alternatively, petitioner argues that if the $2 million is
includable in its income, then petitioner is entitled to a $2
million deduction for the payment to CKH.
2. Respondent’s Arguments
Respondent argues that the assignment of income doctrine
applies and that the entire $2.5 million NSI fee is includable in
petitioner’s taxable income for 1997. Respondent asserts that
petitioner earned the $2.5 million fee. As to the alleged fee-
splitting agreement, respondent maintains that Crispin’s and
Koehler’s testimony is self-serving and not credible. Respondent
also contends that the failure to execute a contemporaneous
written document memorializing a $2 million fee-splitting
agreement is suspect.
Although acknowledging that petitioner was arranging the
sale of the RD stock by a securities dealer like CKS, respondent
maintains that petitioner has failed to show that any portion of
its $2 million payment to CKH is deductible as a business
expense.
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