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The independent salespersons do not receive wages, salary,
sales commissions, or other fees or incentives from ADI or from
the manufacturers or lenders relating to manufactured homes that
are sold. Rather, for their income the independent salespersons
retain 100 percent of the retail price markup from the
manufacturer’s wholesale price.
In the written agreements ADI enters into with the
independent salespersons, the independent salespersons expressly
give up their right to receive any of the manufacturers’ retail
incentive payments and acknowledge that ADI is to receive all
incentive payments.
On petitioners’ timely filed corporate Federal income tax
returns for their tax year ending September 30, 2000, petitioners
deducted, among other things, as section 162 ordinary and
necessary business expenses $243,350 in sales lot lease payments
and $22,387 in miscellaneous expenses incurred during the year.
The $22,387 miscellaneous expenses consist of $16,184 ADI paid to
ship model manufactured homes from closed sales lots to other
sales lots, $3,423 ADI paid to avoid a sheriff’s seizure relating
to delinquent State taxes a former independent salesperson had
not paid, $2,500 ADI paid for repairs on a model manufactured
home, and $280 ADI paid for cleaning a water-damaged carpet in a
model manufactured home.
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Last modified: May 25, 2011