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Petitioner has used the cash receipts and disbursements
method of accounting (cash method) for tax purposes since its
incorporation. Petitioner reports sales at the time it receives
payment. Petitioner deducts the cost of materials and supplies
for each printing job in the year of purchase and deducts all
expenses in the year paid. Petitioner did not report any
beginning or ending inventory on its tax returns and did not use
inventory accounting for either tax or financial accounting
purposes for the year at issue or the immediately preceding tax
year. Since its incorporation, petitioner has reported no
opening or closing inventories on its tax returns.
Petitioner reported its income under the cash method for the
taxable years ending May 31, 1989 through 1995, as follows:
Taxable Year Ending
5/31/89 5/31/90 5/31/91 5/31/92 5/31/935/31/94 5/31/95
Gross receipts $1,450,643 $1,462,904 $1,678,433 $1,499,946 $1,399,727 $1,357,166 $1,135,232
Cost of goods
sold 939,217 890,986 1,026,832900,459 834,879 94,623 759,113
Gross profit511,426 571,918 651,601599,487 564,848 462,543 376,119
Total deductions468,360 585,688 615,220562,412 541,842 531,526 480,820
Net income1 43,066 (13,770) 36,38137,075 23,006 (68,983) (104,701)
Other income28,821 18,238 16,68317,147 21,083 15,346 12,797
Special deductions -0-670 3,064 4,222 6,293 6,007 6,117
Taxable income51,887 3,798 50,00050,000 37,796 (59,644)(98,021)
Schedule A (cost of
goods sold):
Inventory
beginning year-0- -0- -0- -0--0- -0- -0-
Purchases 546,827 483,172 577,861449,492 380,327 420,730 282,490
Labor 335,783 375,021 395,210377,987 382,311 396,928 324,124
Union benefits30,004 25,460 28,15332,383 37,010 35,969 29,624
Misc. O/S
services -0- -0- 18,468 30,995 29,594 33,595 116,410
Sales Tax 20,543 -0- -0- -0--0- -0- -0-
Freight 6,060 7,333 7,1409,602 5,637 7,401 6,465
Inventory
end year -0- -0- -0- -0- -0--0- -0-
Total 939,217 890,986 1,026,832900,459 834,879 894,623 759,113
Schedule E
(compensation of
officers):
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Last modified: May 25, 2011