- 15 -
failed to prove the deposited amounts were for the cost of goods
sold.
Corporate petitioner has produced invoices that establish
the first payments were for the purchase of goods from Shin.
However, it has not produced invoices from Shin for the deposited
amounts. In addition, the invoices provided by Eastimpex do not
contain any indication that they cover only a partial billing for
the goods. Rather, Eastimpex contends that the amount of the
deposits can be recreated by comparing the invoice price with the
full list price from Shin's price list and offers canceled checks
for the deposited amounts. In addition, petitioner husband gave
self-serving testimony that the deposited amounts were for the
cost of goods sold.
Eastimpex offered an excuse for its failure to produce
invoices associated with the deposited amounts which we do not
find credible. First, it was explained that the Taiwanese
Government would not permit a deduction for expenses without an
invoice or evidence of payment. In that regard, it is contended
that Shin used cash to purchase its agricultural raw materials
because local farmers refused to give Shin accurate receipts for
its purchases. In addition, Shin paid its seasonal workers in
cash. Accordingly, Shin could not substantiate these items and,
thus, could not use them to reduce its income on its Taiwanese
returns. Shin did not give invoices to Eastimpex for the alleged
total sales price so that Shin could underreport its income in
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011