B. Albert and Betty M. Holowinski - Page 4

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          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