Cleo Perfume, Inc. - Page 2

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               Following concessions by petitioner,1 the remaining issues for         
          decision are: (1) Whether petitioner had additional income of               
          $2,031,778 in its tax year ended June 30, 1991; (2) whether                 
          petitioner is liable for the section 6651(a)(1) addition to tax;            
          and (3) whether petitioner is liable for the section 6662(a)                
          accuracy-related penalty.                                                   
               All section references are to the Internal Revenue Code in             
          effect for the year in issue, and all Rule references are to the            
          Tax Court Rules of Practice and Procedure.                                  
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.  The          
          stipulations of facts and the attached exhibits are incorporated            
          herein by this reference.                                                   
          Cleo Perfume, Inc.                                                          
               Cleo Perfume, Inc. (petitioner or CPI), a Florida corporation,         
          is engaged in the business of distributing perfume on a wholesale           
          basis.  Its principal place of business at the time the petition            
          was filed was Miami, Florida. It employs the accrual method of              
          accounting and reports its income on the basis of a fiscal year             
          ending June 30.                                                             

               1    Petitioner conceded that it is entitled to neither a              
          $65,000 bad debt deduction nor $59,701 in "other deductions".               
          Petitioner also conceded that it is liable for a $400                       
          environmental tax.                                                          

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