- 6 - petitioners' cost of goods sold by adding the following amounts: $196,398 shown in petitioners' vendor ledger sheets; $67,321 shown on canceled checks that did not appear to be a duplication of those shown on the vendor ledger sheets; $373 based on oral representations received by Agent Koczergo; $22,939 shown on check stubs for December (no canceled checks were available for December) that did not appear to be a duplication of those shown on the vendor ledger sheets; and $3,053 shown on check stubs, for months other than December, that did not appear to be a duplication of those shown on the vendor ledger sheets. In this manner, Agent Koczergo computed a total cost of goods sold of $290,084 for 1993. Respondent's notice of deficiency contained the determination that the $32,453 petitioners reported as cost of goods sold should be increased by $257,631 to arrive at the $290,084 calculated by Agent Koczergo. Petitioners reported on their 1993 income tax return a $65,329 opening and a $32,876 ending inventory and no purchases, costs of materials, labor, or supplies. After subtracting the reported ending from the opening inventory, petitioners reflected a $32,453 cost of goods sold. Agent Koczergo did not observe any inventory on hand during audit-related trips to petitioners' home/business location, and she did not use an inventory figure in arriving at cost of goods sold.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011