Sunbelt Clothing Company, Inc., f.k.a. Unprinted T-Shirt Warehouse, Inc. - Page 19

                                       - 19 -                                         

          L & B Pipe & Supply Co. v. Commissioner, T.C. Memo. 1994-187;               
          Automotive Inv. Dev., Inc. v. Commissioner, T.C. Memo. 1993-298;            
          Paramount Clothing Co. v. Commissioner, T.C. Memo. 1979-64.                 

          5.  General Economic Conditions                                             

               This factor helps to determine whether the success of a                
          business is attributable to general economic conditions, as                 
          opposed to the efforts and business acumen of the employees.                
          General economic conditions may affect a business' performance              
          and indicate the extent, if any, of the employees' effect on the            
          company.  Adverse economic conditions, for example, tend to show            
          that an employee's skill was important to a company that grew               
          during hard times.                                                          
               Respondent contends that the dramatic increase in gross                
          sales was not caused solely by the efforts of Messrs. Bennett and           
          Sokol, but rather, that the general economic conditions of the              
          times had a great impact on petitioner's business just prior to             
          and during the years in issue.  Respondent argues that the                  
          increase in sales was, for the most part, a fortuitous                      
               Petitioner's gross sales rose from $54,455,167 in fiscal               
          year 1990 to $69,748,749 in fiscal year 1991 to $70,059,961 in              
          fiscal year 1992, an overall increase of 29 percent.  If the                
          economic conditions were indeed favorable during this period, we            

Page:  Previous  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  Next

Last modified: May 25, 2011