- 4 - 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):Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011