- 16 -
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,
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011