- -8
Respondent in the statutory notice made no adjustment to CDFC
claimed as deductions by petitioner for the years here in issue.5
OPINION
The issue in this case is purely factual. In the three
stipulations for trial, the parties have agreed to all but two
facts necessary for the computation of gross income from sales by
petitioner for its fiscal years 1989 and 1990. The issue on
which the parties disagree is the amount of customs duties,
freight charges, and other import fees properly includable in the
cost of purchases, and in opening and closing inventory for
petitioner's fiscal years 1989 and 1990. The parties agree that
customs duties paid by petitioner in each year, freight charges,
and other import fees paid by petitioner for delivery of the
5 The parties have stipulated that petitioner is liable for
a deficiency in income tax in the amount of $4,818 for its fiscal
year 1988, and have further stipulated that petitioner is liable
for additions to tax pursuant to secs. 6651, 6653(a), and 6661
for that year. The parties have also stipulated that for its
fiscal year 1989, petitioner is not liable for an addition to tax
under sec. 6651, but that petitioner will be subject to an
addition to tax under sec. 6661 for its fiscal year 1989 if there
is a substantial understatement of tax as defined in sec. 6661(b)
for that year, and that petitioner is liable for an addition to
tax under sec. 6653(a) if petitioner is liable for an addition to
tax under sec. 6661. For its fiscal year 1990, the parties have
stipulated that petitioner is liable for an addition to tax under
sec. 6651, and that petitioner will be liable for an accuracy-
related penalty under sec. 6662(a) if petitioner would have had a
substantial understatement of income tax as defined in sec.
6661(b), had sec. 6661 still been in effect.
The parties have also stipulated that the purchase and sale
of garments and badges is an income-producing factor within the
meaning of sec. 1.446-1(a)(4), Income Tax Regs.
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