Cleo Perfume, Inc. - Page 3

                                        - 3 -                                         

               During the year in issue, petitioner's stockholders were:              
          Oscar Campos, Sr., president; Oscar Campos, Jr. (Mr. Campos, Sr.'s          
          son), vice president for sales; and Elisa C. Martinelli (Mr.                
          Campos, Sr.'s wife), treasurer.                                             
               Petitioner acquires perfumes from numerous suppliers,                  
          including Aeroboutique, S.A. (ASA), of San Juan, Puerto Rico.               
          Between July 1, 1989, and June 30, 1990, ASA sent petitioner                
          merchandise valued at $2,031,778.  After examining the delivered            
          merchandise, Messrs. Campos, Jr. and Sr., telephoned Edgar Balzac,          
          the owner of ASA, threatening to return the merchandise to ASA              
          because the goods were at the end of their useful shelf life and            
          therefore unacceptable. Following further discussion, Messrs.               
          Balzac, Campos, Jr., and Campos, Sr., agreed that in lieu of                
          returning the merchandise, petitioner would keep the perfume on             
          consignment and would pay ASA only for the merchandise that it was          
          able to sell.                                                               
               By June 30, 1990, CPI was only able to sell approximately              
          $100,000 of the merchandise received from ASA. (This amount was             
          properly included in income for the year.)  Inasmuch as the                 
          majority of the goods could not be sold, a decision was made to             
          attempt to sell the merchandise the following Christmas season.             
          The consigned merchandise remained in boxes on the racks in                 
          petitioner's warehouse.                                                     







Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011