Kaps Warehouse, Inc. - Page 3

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            1945 as a "jobber"1 of automotive parts. At all relevant times,                           
            petitioner's operations comprising petitioner, one other related                          
            wholesale warehouse, and 24 related retail stores.  Each of the                           
            related entities to which petitioner sold merchandise was a                               
            separate legal entity. Petitioner also sold merchandise to                                
            unrelated entities.                                                                       
                  During the years at issue, petitioner's stockholders and their                      
            respective percentage ownership interests were as follows:  Michael                       
            Kirkham (M. Kirkham)--25 percent; James Kirkham (J. Kirkham)--25                          
            percent; Linda Sponenburgh (L. Sponenburgh)--25 percent; and O.                           
            Reed and Ruth Kirkham (O.R. and R. Kirkham)--25 percent.  M.                              
            Kirkham, J. Kirkham, and L. Sponenburgh are the children of O.R.                          
            and R. Kirkham, and William Sponenburgh is the husband of L.                              
            Sponenburgh.                                                                              
            Petitioner's Related Entities                                                             
                  Petitioner's related entities purchased approximately 95                            
            percent of their merchandise from petitioner.                                             
                  The Kirkham family formed Kirkham Auto Parts Service Co.                            
            (Kapsco), an S corporation, in the early 1960's.  During the years                        
            at issue, Kapsco's shareholders and their respective percentage                           
            ownership interests were as follows: O.R. Kirkham--23 percent; R.                         


                  1     In the terminology of the industry, a jobber of                               
            automotive parts purchases automotive parts from a warehouse                              
            distributor or manufacturer and sells the parts to installers                             
            (such as a service station) or to retail stores which then sell                           
            the parts to the consumer.                                                                




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Last modified: May 25, 2011