Sanitary Farms Dairy, Inc.
Comm'r of Internal Revenue

Tax Court of the United States.Dec 14, 1955
25 T.C. 463 (U.S.T.C. 1955)
25 T.C. 463T.C.

Docket Nos. 49511 51909.



Vincent C.A. Scully, Jr., Esq., and Sidney B. Gambill, Esq., for the petitioners. George J. Rabil, Esq., for the respondent.

ORDINARY AND NECESSARY EXPENSE— ADVERTISING— COST OF AFRICAN SAFARI TO DAIRY.— The cost of a dairy of sending two of its principal officers to Africa on a big game hunt was an ordinary and necessary expense of the petitioner's business. Vincent C.A. Scully, Jr., Esq., and Sidney B. Gambill, Esq., for the petitioners. George J. Rabil, Esq., for the respondent.

The Commissioner determined a deficiency of $7,304.96 in income tax for 1950 against Sanitary Farms Dairy, Inc., and, for the same year against O. Carlyle Brock and Emily A. Brock, a deficiency of $7,290.72 and an addition under section 294(d)(1)(A) of $729.08 and an addition under section 294(d)(2) of $437.44.

The issue raised by the petitioners is that the Commissioner erred in taxing $15,618.16 as income of the individual petitioners rather than allowing the amount to be deducted as a proper expenditure of the corporation. The Commissioner alleges affirmatively that he erred in not disallowing as a deduction to the corporation for 1950 an ‘additional amount of $2,428 expended in connection with a European vacation and an African safari taken by’ the individual petitioners and in allowing the corporation to deduct as ordinary and necessary expenses of 1950, $2,400.68 and $2,065 paid to the son and daughter of the president of the corporation.


Sanitary Farms Dairy, Inc., called herein the Dairy, was organized under the laws of Pennsylvania in 1934. Its return for 1950 was filed with the collector of internal revenue for the twenty-third district of Pennsylvania.

O. Carlyle Brock and Emily A. Brock are husband and wife. They filed a joint Federal income tax return for 1950 with the collector of internal revenue for the twenty-third district of Pennsylvania.

The outstanding stock of the Dairy at the beginning of 1950 consisted of 5,531 shares, of which O. Carlyle Brock owned 3,608 shares, his wife owned 408 shares, his father and mother owned 460 shares, his son Omar C. Brock owned 400 shares and his daughter Carolyn owned 400 shares. The remaining 255 shares were owned by 26 employees, none of whom was related to the Brocks. Brock was president, treasurer, and a director of the Dairy. His wife was a director. There were 5 other directors, 2 of whom were also officers but none of whom was related to the Brocks.

Brock was born and raised in Canada where he learned to fish and hunt. He was trained and experienced in the milk business and built up the business of the Dairy to be the largest in Erie. The Dairy purchases milk, processes some of it, and distributes milk and milk products, including butter and ice cream, throughout Erie, Pennsylvania, and the surrounding territory.

Brock began an advertising practice in 1938 of inviting wholesale customers and prospective customers to the plant where he and his wife served them dinners of game which he had shot at various places on the North American continent. Later groups such as associations and clubs were invited. Those dinners became so frequent and so large that Brock sent out other employees of the Dairy to assist in killing game for the purpose of the dinners. Motion pictures taken on the hunts were shown at the dinners. The expenses of the dinners were borne by the Dairy.

Some of the mounted heads and cured skins of the game killed for meat for the dinners were assembled in a room in the plant which gradually became a museum for the display of such trophies. The public was invited to see the museum and the plant. A guide was in attendance. The museum attracted groups from the local schools, clubs, and other organizations to the plant, and the Dairy made use of such visits to bring its products to the attention of the visitors as a part of its method of advertising. Many thousands of people have visited the museum.

The advertising manager of the Dairy called to Brock's attention in 1948 or 1949 the publicity which had been given to an individual from a nearby city who had gone to Africa on a brief big game hunting expedition. Discussions ensued involving the advertising manager, Brock, and others in the employ of the Dairy as well as a representative of an outside advertising agency and the board of directors. The decision was reached that it would be good advertising for the Dairy to send Brock and his wife, both experienced hunters, to Africa on an extended big game hunting expedition on which they would obtain additional specimens for the museum, write letters for publication during the period of the trip, and take motion pictures of the expedition which could later be shown to audiences throughout the area served by the Dairy.

Plans for the trip were made in 1949 and early 1950 and carried out in 1950. Brock and his wife flew to Africa by way of London, Paris, and Rome, stopping briefly and taking motion pictures in each city. The left Erie on May 28 and returned in November. They and the Dairy received considerable publicity when they left and when they returned. They wrote letters and took still and motion pictures during the course of their trip. The letters and still pictures, when received in Erie, were given as much publicity as possible, not only in a publication of the Dairy but also in local newspapers. The Brocks killed in Africa and eventually displayed in the museum many animals, always taking extra time, where necessary, to get the finest specimens available. For example, they refrained from killing any elephants except so-called ‘hundred pounders,’ which meant that each tusk of the animal weighed at least 100 pounds. The Dairy gave 2 leopards and a tiger, brought back alive, to the Erie zoo and conducted a ‘Name-the-tiger’ contest through the Erie newspapers.

Emily edited the films after the completion of the trip, and the Dairy began showing the films in auditoriums throughout the Erie district early in 1951. Brock explained the films as they were shown by Emily. He invited the audience to visit the museum. A showing would last over 2 hours.

Every person in each audience had to have a ticket. Tickets were distributed free by drivers on retail routes to their customers and to others who might be prospective customers. Persons in the vicinity where it was proposed to show the films would be advised by handbills and otherwise that they could obtain free tickets by contacting one of the drivers or by a call to the office of the Dairy, in which latter case the tickets would be delivered by the driver who would make personal contact with the recipient. About 180,000 tickets were distributed, and most of them were used.

The Dairy later prepared and distributed a pamphlet containing pictures and descriptive matter pertaining to the safari. The name of the Dairy was prominent in all publicity obtained as a result of the safari.

The net sales, total advertising expenses and net income reported by the Dairy were approximately as follows:

+-----------------------------------+ ¦Year¦Net sales ¦Advertising¦Income ¦ +----+----------+-----------+-------¦ ¦ ¦ ¦expenses ¦ ¦ +----+----------+-----------+-------¦ ¦1947¦$2,112,000¦$60,200 ¦$29,600¦ +----+----------+-----------+-------¦ ¦1948¦2,302,800 ¦52,400 ¦56,100 ¦ +----+----------+-----------+-------¦ ¦1949¦2,470,100 ¦58,000 ¦54,300 ¦ +----+----------+-----------+-------¦ ¦1950¦2,448,700 ¦69,400 ¦49,100 ¦ +----+----------+-----------+-------¦ ¦1951¦2,784,400 ¦73,800 ¦35,900 ¦ +----+----------+-----------+-------¦ ¦1952¦2,886,100 ¦57,600 ¦13,300 ¦ +----+----------+-----------+-------¦ ¦1953¦2,865,600 ¦61,800 ¦26,000 ¦ +----+----------+-----------+-------¦ ¦1954¦2,720,300 ¦46,200 ¦38,400 ¦ +-----------------------------------+

Expenses of the African trip in the amount of $16,818.16 were paid by the Dairy in 1950. The value to the Dairy of the advertising obtained as a result of the trip, the showing of the films and, in later years, the display of the trophies in the museum was far in excess of the entire cost of the expedition.

The Dairy, on its return for 1950, claimed as a part of its advertising expenses $16,818.16 of the amount claimed in that year as expenses of the African safari. The Commissioner, in determining the deficiency against the Dairy, disallowed $15,618.16 of the expenses of the safari but allowed $1,200 thereof designated ‘portion of cost of film deducted.’ He also ‘disallowed another item of $375 with respect to which the corporation is taking no issue’ and as to which there is no further evidence.

The Commissioner, in determining the deficiency against the Brocks, included in their income the $15,993.16 which he had disallowed as a deduction of the Dairy. $15,618.16 of that amount was not taxable income to the individual taxpayers.

The portion of the cost of the safari paid in 1950 was an ordinary and necessary expense of the Dairy for advertising.

The record fails to show that the Commissioner erred in allowing to the Dairy for 1950 a deduction of $2,428 alleged to represent additional expenditures made by the Diary in connection with the safari.

The Dairy deducted on its return for 1950 as ordinary and necessary expense $2,065 paid to G. Carolyn Brock Minton as salary and $2,400.68 paid to Omar C. Brock, III, as salary. The record does not show what services, if any, these two persons rendered to the Dairy for which these amounts were paid. The Commissioner, in determining the deficiency, did not disallow these amounts as deductions. Omar became 18 years of age during 1950 and was in high school. He was in Erie during most of the year. Carolyn was six years older than Omar, was married and spent only a few months of 1950 in Erie.



The cost of a big game hunt in Africa does not sound like an ordinary and necessary expense of a dairy business in Erie, Pennsylvania, but the evidence in this case shows clearly that it was and was so intended. Rodgers Dairy Co., 14 T.C. 66. It provided extremely good advertising at a relatively low cost. The planning of the trip, the departure, news of the progress of the hunt, the return of the hunters, and the presentation and naming of the live animals was reported free by the newspapers as news, to the advantage of the Dairy which was recognized throughout as the sponsor. An advertising agent expressed it as follows:

To a newspaper looking for copy, a big game hunter would get top billing. It appeals to the imagination. There is a little bit of the hunter in all of us, a little of the adventurer, I should say, a little hunting for adventure. When that big game hunter is a prominent member of the newspaper's community, taking a very active and prominent part in the business, civic, fraternal life of the community, then his desirability as copy has increased considerably. It is my opinion that Mr. and Mrs. Brock fill that requirement admirably.

The films were exploited successfully by the Dairy. Credit was given to it at each showing. ‘The people were invited and greeted as customers and friends of the Dairy. The film was presented to them as a dividend for their good will and their patronage. The Brocks (there in person) were presented as executive officers of the Dairy.’ ‘Any facility that can hold the attention of an audience for an hour and a half, to two hours, sometimes three, and impress them favorably (with) the product and the makers of that product, is a highly valuable advertising property.’ The quotes are from the testimony of the advertising agent who favored the trip and introduced the Brocks at the showing of the films. The trophies came into the museum in later years, because it took time to process, ship, and mount them, but when they arrived they too provided good advertising for the Dairy. Costs incident to the preparation, shipping, and mounting of the trophies were paid in later years and are not involved herein.

The evidence shows that advertising of equal value to that here involved could not have been obtained for the same amount of money in any more normal way. The Commissioner allowed $1,200 of the safari expense of 1950 and does not seek to have that changed but contends, as an alternative to complete disallowance, that the remainder of the 1950 expenditures, if legitimate advertising expense, should be spread over later years. There is no pleading to support any amortizing of the amount. Advertising expense is normally deductible in the year paid or accrued. Consolidated Apparel Co., 17 T.C. 1570, affd. 207 F.2d 580; A. Finkenberg's Sons, Inc., 17 T.C. 973; X-Pando Corporation, 7 T.C. 48; Colonial Ice Cream Co., 7 B.T.A. 154; Carey Machinery & Supply Company v. Hofferbert, 32 A.F.T.R. 1281, 50-2 U.S.T.C.par. 9421. The portion of the cost of the safari accrued and paid in 1950 was deductible in whole in that year as a relatively small part of the advertising program carried on by the Dairy.

No part of that cost is taxable to the Brocks as personal travel and pleasure expense of theirs. They admittedly enjoyed hunting, but enjoyment of one's work does not make that work a mere personal hobby or the cost of a hunting trip income to the hunter. There is evidence that this trip represented hard work on the part of the Brocks, undertaken for the benefit of the Dairy, rather than as frolic of their own. The $375 item goes in favor of the Commissioner for lack of proof.

The Commissioner's one affirmative contention, that an additional amount should be disallowed because a part of the safari cost, must fail for reasons given above. Furthermore, he failed to prove the amount involved. His other affirmative contention is that the salaries of Brock's son and daughter were not deductible expenses because they did not furnish services commensurate with the amounts paid them. He has not sustained his burden of proof on this issue. The record does not show the type of services rendered or the time either one spent as an employee. The son was young and in high school, but he had time to work and, for all that has been shown, may have furnished services worth the amount paid him. The daughter spent only a few months in Erie during 1950, but again, it could be that she furnished sufficient services to justify the amount paid to her. Suspicion is not an adequate substitute for evidence to aid the Commissioner on this issue.

Decisions will be entered under Rule 50.