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T.C. 731, 743 (1985); Sherrer v. Commissioner, T.C. Memo. 1999-
122.
For 1993, 1994, and 1995, IRS Publication 1136, Statistics
of Income Bulletin, reflected the following average net profit
margin for roofing contractors:
Average
Net Profit
Year Margin
1993 20%
1994 25%
1995 18%
As indicated, respondent’s tax deficiencies against
petitioner are based on deposits to the checking account with no
allowance for labor and material costs which obviously were
incurred in the roofing business. We conclude that for each year
it is appropriate to apply to the checking account deposits that
are specifically identifiable as gross receipts of the roofing
business (namely, those deposits that represent the checks
received from Roof Technologies and Vaughn Roofing) the average
net profit margin established by respondent for roofing
contractors and to allow estimated business expense deductions
for the business expenses so calculated.
Petitioner has presented no evidence as to how income from
the roofing business should be divided between himself and
Rebecca and Richard Adair. We conclude that one-half of the
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