- 16 -
order to offset its inability to claim deductions for all of its
expenses. If we accede to Eastimpex's argument, we would be in
the somewhat curious and dubious position of allowing Eastimpex
to reduce gross income for the alleged cost of goods sold for
which it lacks invoices justified by Shin's not obtaining a
similar reduction against Taiwanese taxes because it also lacked
invoices.
The evidence offered by Eastimpex only proves that the
deposits were made. Eastimpex has failed to prove that it made
the deposits for goods it purchased from Shin. The mere
coincidence that the deposited amounts equal the difference
between the invoice price and the full list price does not prove
that Eastimpex paid these amounts for goods, especially given the
fact that petitioner husband controlled both Eastimpex and Shin.
Petitioner husband and his immediate family owned slightly
more than 50 percent of Shin, and petitioner husband was Shin's
largest shareholder with 30-percent ownership. Petitioner
husband may not have asserted his power over Shin on a daily
basis. However, petitioner husband acknowledged that he had
sufficient control over Shin, based on his family's majority
ownership, to change its management. In addition, petitioner
husband served as chairman of Shin's board of directors. He also
chose his close personal friend, Edward Chiu, as Shin's general
manager.
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