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With respect to each vendor receiving petitioner-delivered
currency, the delivery was of either, or both of, promotional-
allowance currency or vendor-check currency. A vendor retained
control of its promotional allowance account,7 and only upon its
specific instruction was petitioner authorized to charge the
account and deliver a specified amount of currency to the vendor
at the food show. Petitioner had no discretion in the matter.
Petitioner likewise lacked discretion with respect to the
proceeds of a vendor’s check that it delivered to the vendor at
the food show. In N. Am. Oil Consol. v. Burnet, 286 U.S. 417,
424 (1932), the Supreme Court announced what has been termed the
“claim-of-right” doctrine:
If a taxpayer receives earnings under a claim of right
and without restriction as to its disposition, he has
received income which he is required to return, even
though it may still be claimed that he is not entitled
to retain the money, and even though he may still be
adjudged liable to restore its equivalent. * * *
The doctrine does not apply to amounts a taxpayer receives as a
mere conduit or agent for transmittal to another. E.g.,
Apothaker v. Commissioner, T.C. Memo. 1985-445. Indeed, in a
case predating subchapter T and upholding the payer corporation’s
exclusion from gross income of patronage based refunds, the Court
of Appeals for the Fifth Circuit grounded its analysis in part on
the following proposition: “‘[I]n order for receipts to
7 See supra note 5.
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