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multiplied the number of drinks per bottle by the price
charged per drink to obtain total liquor sales.
Ms. Crabtree told the revenue agent the prices charged
for bottles of alcohol sold in the package store. The
revenue agent multiplied the number of bottles sold in the
package store by the price per bottle to determine total
sales in the package store.
Income From Cover Charges
Respondent’s agent computed income from cover charges
of $91,000 for each of the years in issue. The notices of
deficiency issued to Crabtree Investments provide the
following explanation of the computation of this amount:
Cover Charges were determined by using a $1
charge for 52 Thursday nights per year times 250
(the lounge capacity) and a $2 charge for 104
(Friday and Saturday) nights per year times 375
(1 1/2 times the lounge capacity) or $91,000.
This adjustment is based upon the information provided by
Ms. Jerry Crabtree and Mr. Eddie Crabtree during their
initial audit interviews with the agent.
Income From Food Sales
Respondent determined food sales from the bar to be
$125 per week or $6,500 per year for each of the taxable
years in issue. The notices of deficiency issued to
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