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The original purchase orders from which the agent made the
above summary were among the records that were lost in the
December 1996 fire that destroyed Justins and are not
included as part of the record in these cases.
The revenue agent used the bottle purchases reflected
on the purchase orders provided by petitioners to
reconstruct the total sales for each year. Ms. Crabtree
informed the revenue agent that 80 percent of the liter
bottles purchased were used in the bar and 20 percent were
sold in the package store. The notices of deficiency
issued to Crabtree Investments explain the computation of
bar sales and package store sales as follows:
Bar sales were determined based on using 80
percent of your purchases. The number of unit
purchases (bottles) times the number of servings
per unit purchase times the charges per serving
equals the bar sales.
Package sales were determined based on using 20
percent of your purchases. The number of unit
purchases (bottles) times the unit sales price
equals the package sales.
The allocation described in the above explanation applies
only to liter bottles. On the basis of the statements of
petitioners, the agent treated all other bottles purchased
by Crabtree Investments as having been sold in the package
store.
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Last modified: May 25, 2011