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In support of his burden, respondent relies upon an opinion
letter from the Securities and Exchange Commission (SEC) issued
in response to a “No-Action Request” made on behalf of an
individual and an organization involved in the sale of
securities. According to the opinion letter, the “facts and
circumstances” presented, which might or might not be similar
to petitioner’s, could result in an SEC enforcement action for
violation of the 1934 Act. We cannot help but wonder whether the
circumstances described in the opinion letter are, in fact, so
similar to petitioner’s that the conclusion reached in the letter
has application to petitioner’s situation. Even if applicable,
the conclusion is hardly determinative of whether payment of the
commission expense should be treated as an illegal payment within
the meaning of section 162(c), and the opinion letter, in and of
itself, hardly satisfies respondent’s burden on the point.
Respondent’s disallowance of the commissions expense
deduction claimed on the Schedule C is rejected. Petitioner is
entitled to a deduction for commission expenses to the extent the
payment of those commissions has been substantiated.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: March 27, 2008