- 13 -
and calculation. While petitioner’s criticisms are to some
extent valid, petitioner has not provided records or a more
reliable means to account for his business income. Moreover, the
lack of records is due to petitioner’s design.
Petitioner also makes the theoretical argument that coupon
and buy-down income was accounted for at the point of sale.
Respondent counters that petitioner did not provide adequate
records to show that employees consistently followed the point of
sale procedure for recording coupon and buy-down income.
Therefore, petitioner has not met his burden of establishing that
respondent’s determination was in error.
Unlike other consumer transactions, petitioner could not use
a cash method of accounting for coupon and buy-down income
because of the delay in receiving reimbursement payments.
Therefore, petitioner appears to have used a hybrid accounting
method. Revenues from consumer purchases and other sources were
recorded on a cash basis, and coupon and buy-down income was
reported on an accrual basis. Petitioner testified that
employees accounted for coupon and buy-down income by ringing up
on the cash register the full price of the carton or pack of
cigarettes sold, while collecting from the customer the
discounted price. The transaction also would include ringing up
the amount of the buy-down or coupon. As a result, petitioner
maintained that the full amount of revenue for each cigarette
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011