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The following table shows the costs of goods sold and gross
receipts petitioners reported, and the amount of gross receipts
determined by respondent:
Costs of goods Gross receipts Gross receipts
sold reported reported by determined by
Year by petitioners petitioners respondent
1995 $869,270 $1,088,298 $1,123,087
1996 862,277 1,074,289 1,111,182
1997 881,352 1,077,288 1,118,467
Respondent determined that petitioners understated Manwah’s
gross receipts solely by applying Dun & Bradstreet average gross
profit percentage data for U.S. grocery stores with annual gross
receipts of up to $1 million to their reported costs of goods
sold. Respondent’s agent also estimated Manwah’s gross receipts
by annualizing the amounts shown on daily records that
petitioners had given him, but the record does not show the
results of that analysis. Finally, respondent’s agent used some
of petitioners’ records to estimate the markups of an unknown
number of unspecified products sold in Manwah in 1998. However,
as stated above, respondent’s determination was based solely on
Dun & Bradstreet average gross profit data. In Dang v.
Commissioner, T.C. Memo. 2002-117, we held that the Dun &
Bradstreet data did not provide a reliable basis to estimate
gross profit percentages because petitioners’ store was below
average.
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Last modified: May 25, 2011