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needs for fiscal year 1987. The minutes for petitioner's March
31, 1988, board meeting included a Bardahl calculation for the
first time. The minutes of the March 31, 1989, meeting also
included a Bardahl calculation. Petitioner based its Bardahl
calculations on its prior year's expenses because petitioner had
not closed its books by the time of the year-end meetings and
operating expenses for the current year were not available.
Based on its operating expenses for the year ending March
31, 1987, petitioner concluded that it needed $3,200,000 for
working capital for fiscal year 1988. For fiscal year 1989,
petitioner concluded that it needed $3,600,000 for working
capital.
7. Petitioner's Business Practices
E.S. Gustafson regularly gave about $30,000 of his own money
as Christmas gifts to petitioner's employees. Neither he nor
petitioner deducted these gifts. E.S. Gustafson made Christmas
gifts to the employees for about 15 years, including the years in
issue.
Petitioner did not lend money to or own stock in its
suppliers during the years at issue. Petitioner's officers and
directors do not serve as officers or directors of any of its
suppliers.
Petitioner did not lend money to its shareholders or invest
in unrelated businesses or ventures during the years in issue.
Petitioner does not own any airplanes, yachts, condominiums, or
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