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Petitioner performed all accounting functions for itself,
Kapsco, NPC, and KAW.
Volume Discounts Petitioner Received From Its Suppliers
Petitioner received volume discounts from its suppliers. The
record does not indicate the amount of the volume discounts, the
effect the discounts had on petitioner's financial position, or the
sales volume petitioner had to maintain in order to obtain the
volume discounts.
Petitioner's Sales and "Rebates" Extended to Petitioner's Related
Stores
Petitioner sold the same items to related and unrelated stores
at the same price. However, petitioner gave "rebates" to certain
of its related entities, as follows:
1991 1992
Amount Amount
Kapsco stores NPC $115,000
Idaho Falls--Park $46,000
Pocatello 46,000 KAW 40,000
Rigby 14,000 Total 155,000
Rexburg 14,000
NPC 56,548
Total 176,548
Petitioner did not give rebates to the unrelated stores.
The effect of the rebates was to lower petitioner's profits
and increase the profits (or lower the losses) of the stores
receiving the rebates.
The taxable income of petitioner and the related entities
before and after the rebates was as follows:
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Last modified: May 25, 2011