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11. Petitioner is entitled to deductions for "bad debt
expense" for years ending June 30, 1989, 1990, 1991, and 1992,
only in the amounts of $164,000, $49,201, $130,869, and $4,342,
respectively. Although respondent concedes this issue in the
instant case, respondent does not agree that absorption of the
bad debt expenses by petitioner, the produce distributor, for the
grower is a practice common in the produce industry, but
continues to maintain the positions that (1) a produce
distributor's absorption of the bad debt expense for the grower
is not a practice common in the produce industry, and (2) any bad
debt expense absorbed by petitioner can be taken into account
when calculating the section 482 commission adjustments and/or
additions to tax or penalties.
12. Petitioner must recognize a $525,000 gain for year
ending June 30, 1990, from the sale of the RCLA Division to
Alejandro Canelos. In addition, petitioner does not have to
recognize any gain from the sale of the RCLA Division for year
ending June 30, 1991, and petitioner is not liable for any
penalty under section 6662(a) for year ending June 30, 1991,
relating to the sale of the RCLA Division property. Petitioner
is liable for a penalty under section 6662(a) for a substantial
valuation misstatement as described in section 6662(e) for year
ending June 30, 1990, relating to the $525,000 gain on the sale
of the RCLA Division property.
13. Petitioner is entitled to a deduction for "depreciation
expense" for the year ending June 30, 1991, only in the amount of
$214,798.
14. Petitioner is entitled to a "net operating losses"
deduction for year ending June 30, 1989, in the amount of
$651,171. The $651,171 is the entire allowable "net operating
losses" deduction arising from years prior to year ending June
30, 1989. Unless this Court's determination of the unresolved
issue in the instant cases results in a "net operating loss" for
any of the years ending June 30, 1989, 1990, or 1991, petitioner
will not be entitled to carry forward any "net operating losses"
to year ending June 30, 1992.
15. Petitioner must recognize "additional income" for year
ending June 30, 1992, in the amount of $19,645.
16. Petitioner is entitled to a deduction for "charitable
contributions" for year ending June 30, 1992, only in the amount
of $4,470.
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