- 4 -
Sales were generated by three methods: (1) Through
advertisements in antique newsletters (newsletter sales); (2) at
antique conventions, by selling out of their hotel room and at
auctions (convention sales); and (3) by renting a showcase at the
Colorado Antique Gallery (showcase sales). Sales were
approximately evenly divided between the three methods. While
the bulk of the glassware collection was located in their home,
for security reasons petitioners never gave out their home
telephone number or address. Rather, petitioners paid $50 a
month plus a commission equal to 10 percent of sales to rent the
showcase, which held approximately 100 pieces of merchandise.
For 1992, 1993, and 1994, petitioners' sales from the three
methods, before paying commissions on showcase sales, totaled
$264, $1,583, and $2,253, respectively.
Petitioners kept detailed inventory records and a mileage
log. They maintained a separate bank account for Albe's Antiques
in 1992 and part of 1993, but closed the account in 1993 to save
money on fees. Petitioners insured their inventory on their
homeowners' policy. Albe's Antiques was licensed to do business
and collect sales tax in Colorado.
Petitioners did not prepare any financial statements or
income projections for Albe's Antiques. At the end of each
taxable year, Mr. Myers prepared petitioners' tax returns based
on information petitioners provided to him. Petitioners have not
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Last modified: May 25, 2011