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its traders. The Officers recruited, interviewed, hired, and
trained petitioner’s employees.
The Officers also were petitioner’s executive officers and
managers. They were directly responsible for profit
maximization, long-term business planning, office automation,
cash management, physical plant expansion, marketing, and all
other management functions. When not trading, Mr. Woll focused
on administrative functions and was in charge of cash
disbursements, cash receipts, billing, receivables, and
investigating credit. Mr. Woll also dealt with petitioner’s
accountants, lawyers, and bankers, and he supervised petitioner's
bookkeeping staff. The Officers supervised the shipping staff,
and they personally inspected every part received by petitioner
in order to ensure that the parts were not counterfeit or
defective.
3. Petitioner's Operations
For the 3-year period ended with the year in issue,
petitioner's gross receipts (net of returns and allowances),
gross income, book income, taxable income, Officers'
compensation, Officers' compensation percentages, and Officers'
equity were (rounded to the nearest dollar):
Taxable
Year Gross
Ended Receipts Net Income Taxable Officers' Gross
July 31 (Net) Per Books Net Income1 Compensation Income
19832 $2,671,061 $88,903 $88,903 $26,000 $279,158
1984 29,763,657 1,796,032 1,823,904 1,449,000 5,415,936
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