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Department of Commerce.
During each of the years in issue, beer represented 42
percent of petitioners' purchases of inventory, in terms of
dollars spent. Wine and liquor represented 22 percent of
purchases, and cigarettes represented another 33 percent.
Miscellaneous items, such as soda and snacks, represented the
remaining 3 percent. During those years, petitioners' sales in
each of those categories took place in the same proportions.
Petitioners' weighted gross profit margin for all products for
the years in issue was 10.54 percent. This is equivalent to a
markup on cost of goods sold of 11.78 percent.
B. Petitioners' Theft Loss Deduction
On October 25, 1991, store No. 1 was robbed. Some $22,773
was stolen, consisting of daily receipts, lottery tickets, cash
on hand, beer deposits, sales taxes, lotto machine cash, and
lotto daily cash. Petitioners' logbook entry for that date does
not contain an entry for the amount of the day's sales receipts.
Instead, the logbook contains the following entry: "Robbed
10-25-91". Petitioners deducted $22,773 as a theft loss
deduction on their Federal income tax return for 1991.
Respondent disallowed petitioners' theft loss deduction in the
amount of $19,769. Respondent allowed a deduction of the
remaining $3,004 of the amount stolen. The amount allowed
consisted of $1,750 for the cost of lottery tickets, $166 as beer
deposits, $695 as lotto machine cash, and $393 as lotto daily
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