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petitioner had sufficient information to compute its margin on
each sale. There also is a stipulation as to the net amount of
petitioner-delivered currency retained by the vendors. There is
no evidence confirming the actual payments of petitioner-
delivered currency by vendors to member stores, but the deemed
fact of those payments underlies respondent’s adjustments. While
cash payments to member stores might invite abuse by the member
stores, there is no evidence of any such abuse here, and, to the
extent that payments were actually made by the vendors to member
stores, we assume that the vendors had adequate motivation to
keep adequate records of those payments. In short, whatever
shortcomings exist in petitioner’s records, respondent has failed
to convince us that those shortcomings justify denying petitioner
a reduction in the amount of its gross receipts from sales to
member stores on account of deemed rebates that respondent would
charge against petitioner’s costs of goods sold and would treat
as having been passed on as price reductions to the member
stores.
5. Conclusion
The deemed rebates that respondent charges petitioner with
making are (if they are to be charged to petitioner) properly
characterized as trade discounts. They were not paid with
reference to petitioner’s net earnings but merely passed along
price adjustments that petitioner was entitled to on account of
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Last modified: November 10, 2007