- 5 -
C. F. Asher 156,250 205,000 228,000182,500 165,000 165,000 135,000
D. Asher wage
in C.O.G.S. -0-106,545 138,978134,620 132,295 143,741 101,015
1 Taxable income excluding other income and before NOL and special deductions.
2 Dividends, interest, gross rents and royalties, capital gain, and other income.
Mr. Asher and petitioner's bookkeeper used a commercial
bookkeeping program to prepare balance sheets that included
estimates of petitioner's end-of-year accounts receivable,
accounts payable, salaries and wages payable, and work in
process. The bookkeeper determined the amount of accounts
payable by totaling bills that were due. The bookkeeper also
determined the amount of accounts receivable by compiling
amounts reflected on customer account cards. Mr. Asher
estimated the amount reflected on the balance sheet as work in
process. Mr. Asher's estimates of work in process were based on
the market value that included the expected profit from the
work. The balance sheets for the fiscal years ending May 31,
1989 through 1995, reflect the following amounts:3
Taxable Year Ending
Item 5/31/89 5/31/905/31/91 5/31/92 5/31/935/31/94 5/31/95
Accounts
receivable $176,580$250,378 $196,378$142,673 $221,248$210,471$212,379
Accounts payable35,999 86,334 23,711 44,198 64,206 42,278 45,087
Salaries and
wages payable16,250 12,250 13,25013,250 14,25015,250 16,250
Pension plan
accrual -0- 52,26056,000 -0- -0-20,000 73,597
Work in process120,000 150,000161,000 120,000 145,00080,000 139,000
No later than July 1993, an agent of the Internal Revenue
Service (IRS) began an audit of petitioner's returns for the
3 Amounts are rounded to the nearest dollar.
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Last modified: May 25, 2011