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Petitioner's costs of sales were $2,752,954.45 for taxable
year 1990 (74.83 percent of sales), $3,200,223.61 for taxable
year 1991 (86.98 percent of sales), and $3,203,800.05 for taxable
year 1992 (81.91 percent of sales).
Petitioner used the accrual method of accounting on its
Florida sales tax returns. More than 95 percent of petitioner's
sales were exempt from Florida sales tax.
E. Sale of Petitioner
Ward sold petitioner to United Agri Products, Inc. (UAP), on
August 18, 1994. As part of the negotiations, petitioner gave
UAP financial statements and documents which showed the amount of
petitioner's accounts receivable, accounts payable, and
inventories.
W.D. Ward worked for UAP after the sale. Ward's wife later
paid UAP about $70,000 because UAP could not collect some of
petitioner's accounts receivable.
F. Comparison of Petitioner's Income Under the Cash and Accrual
Methods of Accounting
Petitioner's taxable income under the cash method of
accounting was $130,390 for 1990, $76,384 for 1991, and ($61,782)
for 1992. Petitioner's taxable income under the accrual method
of accounting was $497,288 for 1990, $37,081 for 1991, and
$364,332 for 1992.
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