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Alexander Zakupowsky, Jr., Frederick Brook Voght, Jean Ann
Pawlow, and Carol Ann Johnson, for petitioners.
Albert L. Sandlin, Jr., Thomas R. Ascher, James P. Dawson,
and Martin L. Osborne, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Wal-Mart Stores, Inc., & Subsidiaries,
petitioned the Court to redetermine respondent's determination of
deficiencies in their Federal income tax. Respondent determined
the following deficiencies:
Taxable Year Ended Deficiency
Jan. 31, 1984 (1983 taxable year) $9,937,545
Jan. 31, 1985 (1984 taxable year) 4,084,255
Jan. 31, 1986 (1985 taxable year) 9,381,626
Jan. 31, 1987 (1986 taxable year) 8,206,962
Following concessions by the parties, we must decide whether
petitioners' estimates of inventory shrinkage at yearend are
permissible. We hold they are. Section references are to the
Internal Revenue Code in effect for the subject years. Rule
references are to the Tax Court Rules of Practice and Procedure.
Dollar amounts are rounded to the nearest dollar. The term
"shrinkage" refers to the excess value of book inventory over
actual inventory. The term "overage" refers to the excess value
of actual inventory over book inventory. The term "physical
inventory" refers to the counting of the goods that are actually
in inventory.
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