- 48 -
Based on this testimony, the Court is satisfied that
petitioners did use cash as an incentive or award to motivate
distributors, and these sums would conceivably be deductible
under section 162 as payments for past or future services.
Respondent likewise apparently accepted this view and accordingly
allowed a deduction for cash that petitioners were able, through
documentary evidence, to show was employed in such a manner.10
Specifically, petitioners provided one convention agenda listing
giveaways of $2,100, and respondent permitted a deduction for
that amount. For a greater deduction, petitioners rely on the
categorical statement that all cash claimed by petitioners as a
training, meetings, and/or convention expense or as a promotion
expense was “Absolutely” not used for personal purposes.
However, without more corroboration, the Court cannot credit such
a blanket assertion and is left without a basis for estimate.
Furthermore, regarding diversions such as the random taping
of smaller bills under chairs, the underlying motive would appear
to be more disinterested than compensatory. Petitioners would
have no idea what attendee would select a particular seat, and
that individual could be a child or an accompanying friend or
family member as to whom any compensatory rationale would be a
10 Respondent also permitted Mayor deduction in 1997 of
claimed cash amounts that the record established were used to pay
in cash specific service providers employed for business
purposes. Petitioners have not alleged comparable facts with
respect to any further cash amounts.
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