Marvin L. Barmes and Barbara J. Barmes - Page 16

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                 1995 net profit                       [10]$793,881.00                
                 divided [by] net profit percentage      13.83%                       
                 Gross Proft [sic]                     [10]$5,740,282.00              
                    (q)  Based on total sales of $5,799,767.00 as                     
               reported by Marvin L. Barmes on the Indiana State Form                 
               11405, Business Tangible Personal Property Assessment                  
               Return, for the calendar year ended December 31, 1995,                 
               and utilizing the net profit margin determined by                      
               respondent of 13.83 percent, net profit for from [sic]                 
               the operation of Barbara’s Gift Shop and Barmes Whole-                 
               sale for the tax year ended December 31, 1995 was                      
                    (r)  The Sandbar Wholesale Trust is a mere sham                   
               for tax purposes and should be disregarded.                            
                    (s)  The taxable income attributed by petitioners                 
               to the Sandbar Wholesale Trust for tax year 1995 is                    
               taxable to petitioners for the taxable year ended                      
               December 31, 1995.                                                     
               Where, as here, there is a failure to comply with an Order             
          of the Court with respect to discovery, we may impose such                  
          sanctions as we deem appropriate.  See Rule 104(c); Durovic v.              
          Commissioner, 84 T.C. 101, 119 (1985); Marcus v. Commissioner, 70           

               10Par. 7(p) of respondent’s answer shows the 1995 net profit           
          shown in par. 7(o).  As we indicated supra note 9, par. 7(o) of             
          respondent’s answer contains a mathematical error.  As corrected,           
          the 1995 net profit is $793,836.  As corrected, par. 7(p) of                
          respondent’s answer should read as follows:                                 
                    (p)  Utilizing the net profit percentage based on                 
               total sales from petitioners’ 1994 personal income tax                 
               return of 13.83%, respondent determined petitioner’s                   
               total sales for 1995 to be $5,739,957, as follows:                     
                     1995 net profit                     $  793,836.00                
                     divided [by] net profit percentage        13.83%                 
                     Gross Proft [sic]                   $5,739,957.00                

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