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Petitioner's 1991 Cost of Goods Sold3
Petitioner reported $4,890 as cost of goods sold on Schedule
F on her 1991 tax return.4 The $4,890 represents the purchase
price of livestock and beef as follows:
Magic (horse) $800
Pigs (10 at $45 each) 450
Pigs (20 at $40 each) 800
Beef (6 at $380 each) 2,280
Goats (20 at $10 each) 200
Goats (15 at $15 each) 1360
Total 4,890
1 Petitioner's math was in error. The correct total should
be $225.
Petitioner bought Magic from Standish Livestock Sales in 1991.
Petitioner did not believe that she bought 35 goats, although she
reported both the purchase and sale of 35 goats on her 1991 tax
return. Petitioner did not report the sale of any pigs on her
1991 tax return.
Petitioner's 1992 Cost of Goods Sold
Petitioner calculated her cost of goods sold on part III of
Schedule C on her 1992 tax return as follows:
Inventory at beginning of year $5,850
Purchases -0-
Cost of labor -0-
3 Since respondent does not dispute that the items in
question are allowable as cost of goods sold if properly
substantiated, we will decide only whether adequate
substantiation has been shown.
4 Petitioner reported her business activities on Schedule F
in 1991 using the cash method of accounting. Petitioner changed
the nature of her business and reported it on Schedule C in 1992
and 1993 using the accrual method of accounting.
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