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residential and commercial buildings. The income and expenses from
these activities were reported by the Nortons on separate Schedules
C.
All receipts received from Mr. Norton’s construction and
fishing activities were deposited into a business checking account
maintained at the National Bank of Alaska (NBA). A total of
$2,356,263.15 was deposited into the NBA account during 1993.
For clarity, we have combined our remaining findings of fact
and opinion for each of the issues to be resolved.
Issue 1. Amount of Northridge’s Profit for 1993
Three items remain to be resolved in order to calculate the
profits from Mr. Norton’s construction activities: (1) The amount
of gross receipts; (2) the amount for cost of goods sold; and (3)
the amount for travel expenses.
A. Gross Receipts
Pamela Ennis Crockett (Mrs. Crockett) prepared the Nortons’
Federal income tax return for 1993. Utilizing bank deposit slips
and Forms 1099, Mrs. Crockett determined Northridge’s gross
receipts for 1993 to be $1,205,232.57, calculated as follows:
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