- 52 -
An additional problem was highlighted in the testimony,
which problem applies to the Rolex watches as well as to the
other alleged incentive awards. To wit, the record leaves
substantial uncertainty surrounding the issuance of Forms 1099,
Miscellaneous Income, to the distributors. Mr. Deihl on several
occasions made statements to the effect that: “everybody in the
company received a 1099 that would have included any cash or
Rolexes or any other prizes that they won to my knowledge”, along
with “all their commissions and everything else they’ve earned.”
On this point, the Court observes that petitioners’ entities
claimed substantial deductions under the category “commissions”,
separate and apart from the deductions in dispute in these
proceedings. No attempt has been made to elucidate us as to how
the commission deductions were computed vis-a-vis the amounts
assertedly reported on Forms 1099 and the amounts claimed for the
various incentive awards under training, meetings, and/or
conventions, under promotion, or under suspense. As a result,
the record is ambiguous as to how the amounts deducted as
commissions were determined and whether there exists any
potential for a double deduction if additional amounts were to be
allowed for incentive awards. For all of the reasons discussed
above, the state of the record renders it inappropriate to permit
any further deduction for the motivational giveaways.
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