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price of the contributed bakery inventory at the time of
contribution.
Petitioner is a Delaware corporation. At the time it filed
its petition, its principal place of business was Dublin,
California.
FINDINGS OF FACT
Some of the facts have been stipulated.
During the years in issue, petitioner operated bakeries in
northern and southern California that baked several varieties of
white and wheat bread, muffins and buns, and other bakery
products. Petitioner sold these private label products in its
retail stores under the "Harvest Day" label. In addition,
petitioner's bakeries purchased from unrelated bakeries other
bakery products, including tortillas, fried pies, doughnuts, and
dinner, gourmet, and brown and serve rolls, and other items, for
sale in its stores.
Commercial bakers generally use one of three processes for
preparing commercially baked bread: the sponge dough method, the
liquid sponge method and the liquid brew method. These methods
differ significantly in terms of ingredients and baking times.
The method used affects the aroma, keeping quality, and texture
of the bread. Petitioner used the sponge dough method during the
tax years at issue. The sponge dough method is the most time-
consuming baking process of the three general methods.
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