- 2 - of R’s adjustments is an increase in P’s gross income for each of the years in question in the amount of P- delivered currency paid by vendors to member stores. 1. Held: P is not collaterally estopped from challenging R’s adjustments by our report in Affiliated Foods, Inc. v. Commissioner, T.C. Memo. 1996-505, affd. in part, revd. in part and remanded 154 F.3d 527 (5th Cir. 1998). 2. Held, further, the payments that R charges P with making to member stores are properly characterized as trade discounts. They were not paid with reference to P’s net earnings but merely passed along the price adjustments that P was entitled to on account of the orders placed by the member stores at the food shows. They reduce P’s gross sales and are not defective patronage dividends. William A. Hoy, for petitioner. George E. Gaspar and Mark E. O’Leary, for respondent. HALPERN, Judge: By notice of deficiency dated April 22, 2004, respondent determined deficiencies in petitioner’s Federal income tax of $143,978, $166,493, and $11,101 for petitioner’s taxable (fiscal) years ended September 30, 1991, October 2, 1992, and October 1, 1993, respectively (the audit years). Petitioner is a corporation operating on a cooperative basis (a purchasing cooperative), whose shareholder-patrons operate retail grocery stores. The issues for decision concern the proper treatment of certain payments made to petitioner’s shareholder-patrons at food shows petitioner conducted during the audit years.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: November 10, 2007