- 7 -
The receipts and canceled checks reflected the same total cash
purchases of scrap metal for the year.
On some occasions, Lyell Metal paid cash for expenses
unrelated to the purchase of scrap metal. For example, Lyell
Metal paid cash for the services of an electrician.
On February 21, 1992, respondent requested of Lyell Metal in
writing that Lyell Metal obtain, record, and retain for
respondent detailed information (namely, names, addresses, Social
Security numbers, and employee identification numbers)
identifying the customers from whom Lyell Metal purchased scrap
metal by cash. As of the date of trial, Lyell Metal has not
complied with respondent’s request.
Lyell Metal’s Reported Gross Profit Margins, Federal Income Tax
Returns, and Respondent’s Audits
Based on the evidence before us, from 1989, 1990, and 1991,
Lyell Metal’s gross profit margins (as reflected by gross revenue
and cost-of-goods sold as reported on Lyell Metal’s tax returns)
exceeded the average gross profit margins of similarly sized
scrap metal companies. For 1992, the record does not reflect an
average gross profit margin for scrap metal companies.
For 1989 through 1991, the following schedule reflects Lyell
Metal’s gross revenue and total cost-of-goods sold as reported on
its Federal income tax returns, Lyell Metal’s gross profit
margins based on the tax returns as filed, and the average gross
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011