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final product of the revenue agent, especially in light of her
failure to testify regarding this omission. Respondent has
failed to prove that she understated JKY's gross receipts for
1991 in making her determination.
At trial, Yoon also testified as to the existence of certain
liabilities to his suppliers resulting from cash advances
received from the suppliers. These liabilities, petitioners
claim, increase JKY's nontaxable receipts. Respondent allowed
$129,530 of other nontaxable receipts.
Petitioners have presented Yoon's testimony and several
deposit slips with the names of JKY's Korean-owned suppliers
listed next to amounts of the checks deposited as evidence of
these debts. Yoon testified that no notes were executed, that no
interest was charged, and that he could not recall when he repaid
the debts. Yoon also testified that JKY had outstanding credit
balances with the companies that loaned him money. At trial,
respondent questioned why the suppliers would have loaned JKY
cash instead of reducing the outstanding account balances. Yoon
responded that there was a need for money at the time. Because
JKY was a big customer of these suppliers and Yoon often
entertained the suppliers to garner favor, it is not incredible
that suppliers would advance to JKY relatively small amounts of
cash (when compared to the purchases JKY was making from the
suppliers). JKY's nontaxable receipts for 1991 should be
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