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stores owned by its shareholders. Petitioner also conducts a
small amount of business with stores not owned by shareholders.
Petitioner has 210 shareholders, and these shareholders operate
approximately 640 retail grocery stores (member stores).2 For
Federal tax purposes, petitioner is a nonexempt cooperative that
computes its taxable income under the provisions of Part I of
subchapter T (secs. 1381 to 1383, inclusive).
Member stores purchase food and other consumer products from
petitioner. Petitioner purchases these goods from more than
2,000 manufacturers and suppliers. Petitioner purchases directly
from sales representatives of some manufacturers, such as Proctor
& Gamble (P&G) and Colgate-Palmolive (Colgate), and it purchases
other manufacturers' products from independent brokers, such as
Dejarnett Sales. Brokers typically represented a variety of
manufacturers or distributors. Unless otherwise specified, we
will use the term "vendor" to refer to manufacturers' sales
representatives and brokers.
Petitioner maintains a single bank account with Amarillo
National Bank, which it uses as its general operating account
(Amarillo account). Petitioner makes all of its deposits into
the Amarillo account, and it makes all of its payments from the
Amarillo account, including payroll expenditures.
2 Petitioner does not own any interest in any member store.
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