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costs of goods sold for the years in issue were greater than
respondent determined.
d. Whether Petitioner’s Costs of Goods Sold Were Less
Than Respondent Determined
Respondent contends that petitioner’s costs of goods sold
were less than the amounts determined in the notice of
deficiency. Respondent contends that respondent erroneously
credited payments to Jindge Zhen in calculating petitioner’s
costs of goods sold for 1993-95 as a result of relying on a
document that is unreliable. Respondent determined and contends
that petitioner had cost of goods sold as follows:
Notice of Deficiency Litigating Position1
Supplier 1993 1994 1995 1993 1994 1995
Henry’s Gifts –- $73,189 $4,050 $8,439 $73,189 $4,050
Panalpina $24,573 8,774 7,692 24,573 8,774 7,692
Jindge Zhen 174,500 131,600 154,400 –- 56,000 58,100
Shanghai Charles -- -- -- 41,000 64,000 9,000
Express Publishing -- -- -- –- –- 1,260
Certified Merchant Svcs. –- -- -- –- –- 1,175
Mardi Gras Imports -- -- -- –- –- 6,145
Graphtex –- -- -- -- -- 2,519
United Gift and Novelty -- -- -- –- –- 8,958
Southland Shirts -- -- -- –- –- 1,163
Cunningham Enterprises -- -- -- –- –- 1,333
Total 199,073 2213,563 166,142 74,012 201,963 101,395
1 Respondent’s litigating position is based on amounts
contained in the stipulation. However, the parties did not stipulate
that these amounts included all of petitioner’s costs of goods sold.
2 Respondent determined that petitioner’s costs of goods sold
were $213,564 for 1994. The $1 discrepancy is unexplained in the
record.
Respondent bears the burden of proof on this point. Rule
142(a)(1). To meet this burden, respondent must show that
petitioner’s cost of goods sold for each year in issue was less
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