Sanitary Farms Dairy, Inc.

Sanitary Farms Dairy, Inc. (Dairy) (plaintiff) was owned by O. Carlyle Brock and his family. In 1938, Brock, also a hunter, began inviting prospective and current customers to Dairy for game dinners. In addition to the game dinners, Brock created a museum for trophies of the hunted animals that was open to the public. Dairy used the game dinners and the museum as an advertising tool for both wholesalers and the general public. In 1950, Brock and his wife took a trip to Africa for a big-game hunting expedition. The Brocks intended to use this expedition to gather new advertising material for Dairy and carefully planned the trip to maximize their efforts. On the expedition, the Brocks obtained more pieces for the museum as well as created letters, pictures, and videos for additional advertising materials. The letters and still pictures were used in the local newspaper to document the progress of the Brocks’ trip and after they returned, a film was made to be shown at the museum. The film ran for over two hours, and free tickets were dispersed to Dairy’s prospective and current customers on Dairy drivers’ retail routes. On its 1950 tax return, Dairy claimed the African expedition expenses in the amount of $16,818.16 as advertising expenses. The Commissioner of Internal Revenue (the commissioner) (defendant) issued a deficiency disallowing all but $1,200 of Dairy’s claimed advertising expenses, adding $15,993.16 back to Dairy’s taxable income. Dairy appealed the commissioner’s assessment.