- 12 -12
be subtracted from purchases and deducted as business expenses.
With respect to gross receipts, two adjustments are warranted.
First, the cost of goods sold used in the calculations of gross
receipts should be adjusted pursuant to the previous sentence.
Second, instead of applying gross profits of 15 percent (i.e., a
markup of 18 percent) to guns and 40 percent (i.e., a markup of
67 percent) to other goods, the cost of guns and other goods
should be marked up by 15 percent and 40 percent, respectively
(i.e., cost of guns should be multiplied by 115 percent and cost
of other goods should be multiplied by 140 percent).
In all other respects that have not been specifically
addressed, we conclude that respondents' deficiency determination
is correct.
III. The Additions to Tax
Respondent determined additions to tax pursuant to section
6651(a)(1) for each of the years in issue. Section 6651 provides
an addition to tax for failure to file a tax return in a timely
manner, unless such failure was due to reasonable cause and not
due to willful neglect. Petitioners concede liability for 1990,
1991, and 1992 and have the burden of proving that their 1993
return was timely. See Welch v. Helvering, 290 U.S. at 115.
They contend that they filed their 1993 return in a timely manner
but they failed to present any credible evidence supporting their
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011