- 14 - their position with respect to Mr. Hopkins’s S Corporation’s claimed advertising expense deduction of $3,130 and Mr. Hopkins’s S Corporation’s claimed promotional expense deduction of $39,000, petitioners argue that it is appropriate under section 162(a) to compare the respective amounts of (1) the advertising expenses giving rise to Mr. Hopkins’s S Corporation’s claimed advertising expense deduction of $3,130 and (2) the promotional expenses giving rise to Mr. Hopkins’s S Corporation’s claimed promotional expense deduction of $39,000 to the amount of gross sales of Westchem (i.e., approximately $2.5 million) during the last six months of 1999 that were attributable to the sales efforts of Mr. Hopkins’s S Corporation.17 (For convenience, we shall sometimes refer to petitioners’ argument regarding the respective compari- sons to be made in determining entitlement to the deductions at issue as petitioners’ comparison argument.) Respondent counters that the Court should reject petition- ers’ comparison argument and that the Court should not allow the 17To support entitlement to the deductions at issue, peti- tioners also offered the testimony of George Fague (Mr. Fague). Mr. Fague, who formed Westchem around 1983 and who at the time of the trial in this case was its CEO, testified that Westchem relied on its sales representatives, including Mr. Hopkins’s sole proprietorship and Mr. Hopkins’s S Corporation, to conduct certain promotional activities. In addition, Mr. Fague testified that “MPH Enterprises is one of our [Westchem’s] top performing rep organizations”. We find that Mr. Fague’s testimony does not establish entitlement to the deductions at issue.Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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