Comtek Expositions, Inc. - Page 16

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          shows conducted solely by petitioner and from shows conducted               
          outside the former Soviet Union, foreign trade shows held during            
          the taxable year ended July 31, 1996, produced the following net            
          profit:                                                                     
               Gross exhibition revenues                    $20,687,586               
               Less:  Crocus’s direct expenses substantiated     4,003,930            
               Less:  Expocentr lease payments substantiated     7,003,947            
               Less:  Petitioner’s direct expenses             3,563,363              
               Net Profit                              6,116,346                      
               On its Federal income tax returns for the taxable years                
          ended July 31, 1995 and July 31, 1996, petitioner reported as               
          income 25 percent of gross receipts from foreign trade shows held           
          after December 31, 1994, in accordance with the royalty agreement           
          and deducted trade show expenses it incurred directly.  Taking              
          into account adjustments to gross receipts agreed to by                     
          petitioner and respondent and disregarding receipts from foreign            
          trade shows conducted solely by petitioner and from trade shows             
          conducted outside the former Soviet Union, petitioner reported              
          net income of $922,295 from the stipulated $4,271,229 net profit            
          for foreign trade shows held from December 31, 1994 through July            
          31, 1995 (25 percent of gross revenues, amounting to $3,267,804,            
          minus petitioner’s direct expenses of $2,345,509) and net income            
          of $1,608,534 from the stipulated $6,116,346 net profit for                 
          foreign trade shows held during the fiscal year ended July 31,              
          1996 (25 percent of gross revenues, amounting to $5,171,897,                
          minus petitioner’s direct expenses of $3,563,363).  In so doing,            






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