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Petitioner operates independently and competes directly with
major oil companies by selling gasoline at a price lower than
that of the stations of those companies. For the respective
subject years, petitioner’s tax returns reported that its gross
receipts were $61,359,783, $61,406,193, and $56,265,955, that its
total income was $6,574,351, $5,203,710, and $3,704,259, and that
its taxable income was $2,126,645, $1,283,987, and $985,747.
Petitioner reported that its balance sheet at the end of those
years and 1989 was as follows:
1989 1990 1991 1992
Current Assets:
Cash $2,508,283 $3,526,942 $3,495,498 $4,245,727
Accounts receivable 1,596,322 495,332 456,686 433,204
Inventory 266,588 353,990 288,883 271,350
Prepaid expenses 671,566 1,061,716 1,019,877 748,286
5,042,759 5,437,980 5,260,944 5,698,567
Long-term assets:
Property and equipment 900,982 979,368 1,245,184 1,245,184
Less: accumulated depreciation (567,330) (719,855) (822,012) (913,557)
Officers’ life insurance: C.S.V. 445,385 525,904 660,344 752,034
Notes receivable 35,155 1,126,777 1,575,929 1,643,343
Investments 189,589 304,915 327,579 367,158
1,003,781 2,217,109 2,987,024 3,094,162
Total assets 6,046,540 7,655,089 8,247,968 8,792,729
Current liabilities:
Accounts payable 91,420 146,040 98,985 114,959
Other current liabilities 687,682 850,341 572,962 442,175
779,102 996,381 671,947 557,134
Long-term liabilities:
Mortgages and other debt 210,560 210,560 233,735 210,560
Equity:
Capital stock 125,000 125,000 125,000 125,000
Unappropriated retained earnings 4,931,878 6,323,148 7,217,286 7,900,035
5,056,878 6,458,148 7,342,286 8,025,035
Total liabilities and equity 6,046,540 7,655,089 8,247,968 8,792,729
John F. Haffner (John) and his wife, Emma (Emma), started
petitioner’s business in or about 1940 as a single station, and
the business has grown to include 13 stations (most of which are
self-service and are staffed with relatively unskilled employees)
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