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Net Income Shareholder's
Year Ended Sales After Taxes Equity16
Feb. 28, 1986 $61,499,000 ($3,599,000) ($1,514,000)
Feb. 28, 198717 -- -- 2,641,000
Feb. 29, 1988 55,510,000 413,000 512,000
Feb. 28, 1989 57,672,000 390,000 1,129,000
Feb. 28, 1990 60,960,000 325,000 1,454,000
Feb. 28, 1991 56,884,000 275,000 1,729,000
According to its Federal income tax returns, petitioner had
the following sales, net income after taxes (but before utiliza-
tion of net operating loss carryforwards/carrybacks), and share-
holder's equity for the years indicated:
16 The shareholder's equity in petitioner as shown in its par-
tial-year financial statement for the period Dec. 29, 1986,
through Feb. 28, 1987, and in its Federal income tax return for
its taxable year ended Feb. 28, 1987, reflected the purchase of
petitioner by Stanislaus. That purchase was reflected at
$2,500,000 and caused an increase in petitioner's shareholder's
equity by that amount. When Stanislaus was merged into petition-
er at the end of February 1988, the transaction was reversed, and
petitioner's shareholder's equity was reduced by a corresponding
amount. That reversal is reflected in petitioner's financial
statement for its fiscal year ended Feb. 29, 1988, and in its tax
return for its taxable year ended Feb. 28, 1989.
17 Because only a partial-year financial statement was prepared
for petitioner's fiscal year ended Feb. 28, 1987, petitioner's
sales and net income data for that year are unavailable. How-
ever, the parties stipulated to the use of the sales and net
income amounts reported in petitioner's Federal income tax return
for its taxable year ended Feb. 28, 1987, as the sales and net
income amounts for petitioner's financial statement for its
fiscal year ended Feb. 28, 1987. Accordingly, when referring
herein to petitioner's financial statement for its fiscal year
ended Feb. 28, 1987, we shall use petitioner's sales of
$58,515,000 and net income of $823,000 as reported in its Federal
income tax return for that year in lieu of the actual financial
statement sales and net income data for that year.
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