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Mr. Wen’s shares of stock. Sam Kong Fashions paid Mr. Wen
$50,000 for his 50 shares of stock. From April 1994 to December
1995, Mr. Kong was the sole shareholder of Sam Kong Fashions.
During the taxable years in issue, Sam Kong Fashions engaged
in the business of sewing garments as a subcontractor for other
companies in the garment business.4 It performed sewing services
for Style Setter Fashions, Inc. (Style Setter), Half Moon Bay,
Inc. (Half Moon Bay), and East West Manufacturing, Inc. (East
West). Sam Kong Fashions delivered the completed garments to the
contractors, and the contractors paid Sam Kong Fashions per
completed garment. Mr. Kong provided hangers and bags to the
contractors as an accommodation; the contractors paid for the
bags and hangers in addition to the per garment fee. At least
one contractor created different invoices and issued separate
checks for the hangers and bags.
During 1994, Style Setter issued 48 checks to “Sam Kong”,
which totaled $592,370.50.5 Sam Kong Fashions deposited only 16
of these checks into its business checking account maintained at
4 Generally, Sam Kong Fashions assembled garments using cut
pieces supplied by the contractors.
5 On the basis of the evidence presented, we calculate that
these 48 checks total $592,550.50. Because respondent requests
that we find that the 1994 Setter Style checks issued to Mr. Kong
total $592,370.50, we shall use respondent’s figure.
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