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earnings connection, the passed-on rebates fail as price
adjustments because they are defective patronage dividends, then
what of other transaction-specific rebates, refunds, or price
adjustments? Are we to conclude that, if a purchasing
cooperative has a buy-two-get-one-free sale, offers a loss-leader
or a volume discount, or, indeed, sells any good or service for
less than some hypothetical normal price, it has paid a defective
patronage dividend unless, in some way, it can show that the
price reduction is a distribution of net earnings? Indeed, must
any merchant offering a rebate, refund, or other price reduction
consider whether it is operating on a cooperative basis,
distributing defective patronage dividends? We think not.
We conclude that a transaction-specific price reduction,
such as is encompassed by the term “trade discount”, is not
generally determined with respect to the net earnings of the
payer, and, for that reason, it is not a patronage dividend
(defective or not).
4. Other Factors
Respondent argues that petitioner “has virtually no records
of the currency incentives used at the food shows. It destroyed
most of the relevant records. * * * This fact combined with the
use of cash invites suspicion.” While it is true that petitioner
discarded most all of the tear strips after the relevant
information was entered into its billing and accounting records,
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