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representative and counsel for respondent on January 11, 1999.
At this meeting, several issues were discussed. Among them were
various details relating to the proper cost of goods sold
amounts, including the contested issue of the amount of beginning
inventory for 1992. In addition, petitioners presented documents
regarding insurance premiums which respondent accepted as
substantiation of properly deductible expenses.
At a meeting on January 26, 1999, petitioners presented
additional material regarding the beginning inventory issue. At
another meeting held on February 17, 1999, several topics were
again discussed, including travel and entertainment expenses, for
which respondent allowed a partial deduction. At this meeting,
respondent made a settlement offer which proposed to make some
concessions favorable to petitioners in exchange for reciprocal
concessions. Respondent contends that petitioners provided new
information with regard to the costs of goods sold issue at this
meeting, but petitioners dispute this contention. After the
meeting, respondent made final calculations regarding the
settlement offer, and forwarded the offer to petitioners on
February 23, 1999. The offer consisted of the following
liabilities in the total amount of $24,540:
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