- 5 -
estimated Manwah’s gross receipts to be $1,123,087 for 1995,
$1,111,182 for 1996, and $1,118,467 for 1997.
Second, Ng estimated Manwah’s gross receipts by annualizing
the amounts shown on the daily records that petitioners gave him.
The record does not include the results of that analysis.
Third, petitioners gave all of Manwah’s records for 1998 to
Ng. Ng used them to estimate the markups of specific products sold
in Manwah. The record does not indicate which products he
analyzed. Ng concluded that the average markup for those
unspecified products was 25 to 28 percent.
Respondent determined that petitioners understated Manwah’s
gross receipts on their returns solely by applying the Dun &
Bradstreet gross profit percentage data to Manwah’s reported costs
of goods sold. Respondent did not use Ng’s estimate of Manwah’s
annualized daily receipts or markup of specific products for 1998
to determine petitioners’ unreported income.
OPINION
A. Whether Petitioners Underreported Gross Receipts
Petitioners contend that they had gross receipts from Manwah
of $1,088,298 for 1995, $1,074,289 for 1996, and $1,077,288 for
1997, as they reported on their returns.
Respondent contends that petitioners had gross receipts of
$1,123,087 for 1995, $1,111,182 for 1996, and $1,118,467 for 1997,
Page: Previous 1 2 3 4 5 6 7 8 Next
Last modified: May 25, 2011