Ted W. Gleave - Page 39

                                       - 39 -                                         
          result on these facts.  Thus, although petitioners may or may not           
          be technically correct in contending that the bank deposits                 
          method overstates Kenmore’s gross receipts because of these                 
          Broskin transactions, this method does not cause Kenmore’s                  
          taxable income to be overstated.                                            
               Petitioners suggest that the prebuys may have resulted in              
          the bank deposits method’s overstating Kenmore’s gross receipts.            
          Only one prebuy is described in some detail, (1) in testimony by            
          Bohn and Broskin and (2) in a stipulated extract from Kenmore’s             
          books and records.  On or about May 19, 1982, Kenmore gave                  
          $105,000 cash to Broskin, for him to buy 100,000 gallons of                 
          gasoline.  Broskin delivered the gasoline in 13 installments to             
          Kenmore over a 5-week period.  Most of the deliveries were to the           
          Sheridan location.  Broskin invoiced Kenmore for the delivered              
          gasoline at $1.05 per gallon, plus an amount for trucking.                  
          Kenmore’s books show the transaction as “Purchased in advance               
          from Broskin”, with each delivery resulting in a reduction of the           
          amounts in both the “Bal. gal.” and the “Bal. $” columns.  The              
          final delivery, on June 22, 1982, resulted in the “Bal. gal.”               
          column being reduced to zero and the “Bal. $” column being                  
          reduced to negative $2,240.57.  This last amount is shown as                
          having been paid on June 25, 1982, with the balance in the “Bal.            
          $” column then shown as zero.  We are satisfied from the record             
          in the instant cases that this transaction involved (1)                     
          $107,240.57 deductible expenditures ($105,000 for the gasoline              






Page:  Previous  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  Next

Last modified: May 25, 2011