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for the fiscal year ended May 31, 1995, had been destroyed or
misplaced. Having become aware of Ms. Groom’s audit, respondent
examined her audit report for the applicable period and adopted
it in principal to determine petitioner’s gross sales for the
period June 1, 1994, through April 30, 1995. Respondent also
relied upon petitioner’s “Statement of Revenues, Expenses and
Retained Earnings” for the month ended May 31, 1995.
After reviewing Ms. Groom’s audit report and petitioner’s
“Statement of Revenues, Expenses and Retained Earnings” for the
month ended May 31, 1995, respondent determined that petitioner
had gross sales of $1,808,423 for the fiscal year ended May 31,
1995. From that amount, respondent allowed the following
deductions:
Sales tax $108,318
Other voids 23,085
Voids and overrings 237,342
$368,745
Respondent deducted from the amount of gross sales
($1,808,423) the foregoing amount of $368,745 and calculated an
amount of net gross sales of $1,439,678 for the applicable
period. The record shows that petitioner does not challenge the
amounts determined as deductions for sales tax, other voids, and
voids and overrings.
On its Federal income tax return for the fiscal year ended
May 31, 1995, petitioner reported income of $1,319,308. In his
notice of deficiency dated January 3, 2001, respondent determined
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