- 10 -
newspaper carriers as part of a compliance research project. In
addition, respondent's agents questioned the Star Telegram about
how the figures on the monthly circulation statements were
calculated. As a result of these other examinations and the
information received from the Star Telegram, respondent developed
a ratio between the cost of the newspapers charged to a newspaper
carrier and the newspaper carrier's gross receipts. Agent Wilder
checked the accuracy of her estimates in this case against this
ratio and found them to be within an acceptable range.
Based upon Agent Wilder's calculations, in the notice of
deficiency respondent determined that the gross receipts and cost
of goods sold of petitioner's newspaper delivery service were as
follows:
1991 1992
Gross receipts or sales $104,929 $93,323
Cost of goods sold 71,288 58,848
As previously noted, petitioners now agree that the cost of goods
sold amounts are accurate. After taking into account the amounts
reported on the Schedules C for these items and an adjustment not
in dispute, respondent increased petitioners' income by $14,842
and $14,758 for the years 1991 and 1992, respectively.3
3Due to these changes, respondent increased petitioners'
liability for the self-employment tax imposed by sec. 1401 and
determined that petitioners were ineligible for the earned income
credit. These adjustments are not in dispute and will be
resolved in accordance with the resolution of the disputed issue.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011