- 3 - Some of the facts have been stipulated and are so found. The stipulations and attached exhibits are incorporated herein by this reference. Petitioner's principal office was in Hicksville, New York, when it petitioned the Court. Petitioner filed its Federal income tax return based on a fiscal year ending July 31, 1985, and it used the cash receipts and disbursements method. 1. Petitioner Petitioner is a "third-tier chip broker” that locates, purchases, and sells computer chips, electronic components, and integrated circuits.2 Petitioner and its predecessor, Pulsar Components, Inc. (Components), developed a niche in their field that enabled them to take advantage of supply and demand imbalances caused by the production capacities of microchip manufacturers and the production needs of computer manufacturers. Petitioner located scarce parts during periods of low supply and high demand by using a network of brokers, surplus houses, distributors, and manufacturers, of which it had a working 2 Computer manufacturers obtain electronic components and microchips from three sources (tiers) of supply. The first tier, the primary source of supply of electronic components, is a chip manufacturer such as Intel, Micron, or Fujitsu. Approximately 90 percent of the parts purchased by equipment manufacturers are purchased directly from chip manufacturers. The second tier, franchise distributors such as Arrow Electronics, Hamilton-Avnet, and Schweber, are typically large corporations that warehouse substantial inventories of parts. Franchised distributors have franchise agreements to represent product lines of certain manufacturers, and they sell parts out of inventory for a set markup that is usually 15 to 20 percent. The third tier consists of chip brokers and traders like petitioner.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011