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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.
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