- 23 -
III. Discussion
A. Arguments of the Parties
Respondent argues that, for each of the audit years,
petitioner has an item of gross income on account of petitioner-
delivered currency because petitioner “asserted control over
those funds and used the vendor representatives as conduits to
make ‘disguised patronage dividends’ to its member stores at the
food shows.” Respondent lists the following as among the
important operative facts:6
Petitioner negotiated for the food show rebates
and thereby provided for the direct payment of monies
from vendors to members that would otherwise have
accrued to Affiliated as earnings, i.e., rebates from
vendors to Affiliated for product purchased by
Affiliated.
A member received food show rebates based on the
amount of product purchased at the show. The greater
the product purchases meant more food show rebates.
Members committed to make purchases at the food
show and subsequently bought the product through
Affiliated.
In this manner, a member received rebates based on
the amount of product purchased through Affiliated, and
Affiliated was able to provide a patronage dividend
without complying with the statutory requirements.
While petitioner disagrees that it paid any patronage
dividends or asserted control over the petitioner-delivered
currency (petitioner argues that it was only delivering to
6 Paragraph numbers and citations of respondent’s proposed
findings of fact are omitted.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
Last modified: November 10, 2007