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June 30, 1994, was $1,556,404, and its absorption ratio for the
year then ended would have been 42.87 percent.
Petitioner’s gross receipts and other revenue for the
subject year totaled $5,874,039. Of that amount, $5,241,830 was
from sales,1 $623,469 was from royalties from the licensing
agreements, and $8,740 was from interest, discounts, and service
charges. The gross receipts from sales were attributable to the
following items:
ITEMS Receipts
Greeting cards $2,034,561
Boutique; e.g., party goods and balloons 849,656
Stationery, box notes & memo pads 675,639
Christmas products; e.g., cards 621,082
Books, calendars, & recipe cards 315,034
Wrap and tote 193,101
Invitations 191,280
Gift enclosures 86,425
Other items 275,052
Total 5,241,830
For the 3 taxable years preceding the subject year, petitioner’s
gross receipts were $6,711,723, $6,772,772, and $5,898,638,
respectively.
Respondent determined that petitioner is subject to the
UNICAP rules. Respondent determined that petitioner’s cost of
goods sold for the subject year was overstated by $667,267 by
1 The cost of goods attributable to those sales was
$2,108,921. The only item reportedly included in that cost was
“Purchases”.
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