- 28 - beer, which accounted for 42 percent of its sales, at an average margin of 11 percent. Nick's Liquors sold wine and liquor, which accounted for 22 percent of its sales, at an average margin of 13.5 percent. Cigarettes accounted for approximately 33 percent of sales, and they sold at an average margin of 6.5 percent. The other 3 percent of sales was for miscellaneous items. Petitioners have not provided a sufficient basis for us to find that their profit margin on miscellaneous items was less than the approximately 27 percent proposed by respondent. The overall result is that petitioners' weighted gross margin for the years in issue is 10.54 percent. IV. Petitioners' Theft Loss Deduction On October 25, 1991, $22,773 was stolen from store No. 1. Petitioners' logbook entry for that date does not contain an entry for the amount of the day's sales receipts. Instead, the logbook contains the following entry: "Robbed 10-25-91". Of the amount stolen, respondent has allowed the deduction of $3,004, which represents lottery tickets, receipts for the sale of those tickets, and beer deposits. These apparently are amounts that petitioners, in the course of their business, were holding as agents for third parties, including the State of Indiana. Section 165(h) permits a deduction for a loss arising from theft. It is settled, however, that the amount of a theft loss may not exceed basis. In the case of cash which is part of gross receipts, the amount of loss due to theft is not deductible ifPage: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Next
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