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Sari Collection,13 and various payments were made to the company
throughout the taxable year. However, as shown in a handwritten
notation on an invoice from Arizona Natural Resources and in
Mayor’s general ledger, petitioners paid only a portion of a
billed charged and accrued the remaining $123,250 as an
additional account payable as of December 31, 1998.
Petitioners mention the purchases adjustment in their
pretrial memorandum, stating: “This is a timing issue. The
dispute was denied and the $123,250 was paid to Arizona Natural
resources [sic], plus interest and attorney fees. Petitioners
should not be required to go back and amend returns for a year in
which the amount was actually paid.” Petitioners do not discuss
the matter on opening brief, while respondent concedes that
petitioners did incur valid business expenses with respect to the
Sari cosmetic line but argues: “Because there was a dispute over
this amount [the $123,250], it was never paid. If it were to
have been paid, however, deduction would not be permissible until
the date of payment.” Petitioners respond on reply brief, with
their argument, in its entirety, consisting again of two
sentences: “The monies owed Arizona Natural Resources were paid,
but after 1998, and thus, for a period closed for the companies.
Thus, the amount should be deducted for 1998.”
13 Petitioners from time to time diversified the products
offered through their multilevel marketing structure.
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