- -11
According to the information reported on Nikki's returns,
Nikki's gross rents and license fees doubled from 1988 to 1989.
However, from 1988 to 1990, despite the increase in gross rents
as compared to 1988, insurance expenses and truck maintenance
expenses decreased.
For its fiscal years ending September 30, 1988, 1989, and
1990, Nikki's reported taxable income as follows:
Fiscal year ended Taxable income (loss)
Sept. 30, 1988 ($31,543)
Sept. 30, 1989 93,786
Sept. 30, 1990 (30,896)
A&A's gross sales for its fiscal year ending March 31, 1991,
were $43,784,608.
For its fiscal year ending March 31, 1991, Gillette Tire
reported net sales of $4,790,749.
During his audit of petitioner's tax liability, Agent
Siebert reviewed every item in petitioner's truck maintenance
account for the fiscal years ending June 30, 1990 and 1991.
Among the items in the account claimed as truck maintenance
expenses on petitioner's Federal income tax returns for its
fiscal years ending June 30, 1990 and 1991, Agent Siebert found
no invoice for the purchase of tires other than Gillette Tire's
invoice No. 30088 for $387,637.30 dated April 9, 1990. During
his examination, Agent Siebert was given no documentation
relating to the actual delivery of the tires petitioner purchased
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