-12-
line, and a "Net Bid" line. The entries under each category
provide little information beyond quantities and dollar amounts.
Mr. Sager used the bid sheets to estimate petitioner's
income in the following way. Mr. Sager examined the dollar
amount entered on the "Profit" line on each of the seven bid
sheets, as a percentage of the amount entered on the "Net Bid"
line. Mr. Sager then looked for other potential sources of
profit, such as a 5-percent "Weather Factor" included in the
"Labor" amounts, and 2- to 5-percent factors applied to certain
amounts in the "Materials" category. Taking all these factors
into account, Mr. Sager concluded that a reasonable profit
percentage for petitioner's plumbing business would be 11.14
percent of gross revenues.
All other calculations in Mr. Sager's report (with the
exception of a few "Statistical Projections" discussed below)
depend on this 11.14 percent estimated profit factor. In fact,
Mr. Sager's calculations of petitioner's "gross profit" for 1989-
92 are nothing more than the gross receipts of petitioner as
determined by respondent for each of those years, multiplied by
11.14 percent.
We believe the estimates of petitioner's income based on the
"bid sheets" are unreliable for several reasons. Five of the
seven bid sheets are undated, and one of the sheets that is dated
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