Quantum Company Trust - Page 6




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               Once again, we are required to distill truth from falsehood.           
          See Diaz v. Commissioner, 58 T.C. 560, 564 (1972).  Having observed         
          Mr. Norton while he was testifying, we find his testimony as to the         
          source of the $86,155 deposit credible.  We are satisfied that              
          there was a true debtor-creditor relationship and that this                 
          relationship created an unconditional and enforceable obligation to         
          repay the moneys advanced.  Consequently, we conclude that                  
          Northridge’s gross receipts for 1993 were not underreported as              
          respondent maintains.                                                       
               B.  Cost of Goods Sold                                                 
               The parties stipulated that Northridge’s cost of goods sold            
          for 1993 was $945,143, rather than $945,732, as reported on the             
          Nortons’ original and amended Schedules C.  In arriving at this             
          amount, the auditing agent reviewed substantiating documentation.           
               At trial, the Nortons sought an additional $4,650 for cost of          
          goods sold, claiming that this amount was paid to David & Sons for          
          cabinets and other items.  In support of this claim, the Nortons            
          introduced an undated invoice, as well as a copy of their check             
          ledger.  The check ledger for February 12, 1993, indicated that a           
          check was made payable to “David & Sons” in the amount of $4,450.           
          No canceled check to show that the $4,650 invoice was paid was              
          introduced.                                                                 
               We do not believe that, in general, a party to a stipulation           
          should be allowed unilaterally to disregard the stipulation.  Even          






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