Sam Kong Fashions, Inc. - Page 21

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          of $12,013 for the cost of threads on its 1995 corporate tax                
          return.                                                                     
               Petitioners did not offer any documents, such as receipts or           
          invoices, to substantiate its claimed expense.  However,                    
          petitioners rely on the testimony of Mr. Wen to support the                 
          claim.  Mr. Wen stated that he was not involved in the management           
          of the business.  While he was employed by Sam Kong Fashions, Mr.           
          Wen delivered finished products, ironed garments, and performed             
          handiwork.  We are not convinced that Mr. Wen had adequate                  
          knowledge of Sam Kong Fashions’s business operations to                     
          accurately testify about the amount of thread that Mr. Kong                 
          purchased in 1994.                                                          
               Additionally, representatives of Style Setters and Half Moon           
          Bay testified that the contractors often provided the thread that           
          Sam Kong Fashions used to sew the garments.15  Ms. Augustyn and             
          Mr. Sporidis testified that the contractors provided some thread            
          to Sam Kong Fashions, particularly at the beginning of their                
          business relationship.  Although the record establishes that Sam            
          Kong Fashions did purchase thread, the evidence fails to                    
          establish whether Sam Kong Fashions incurred any expenses beyond            

               15 Ms. Augustyn testified that Style Setters provided thread           
          to Sam Kong Fashions “Most of the time.”  Mr. Sporidis, the                 
          president of Half Moon Bay, testified that Half Moon Bay                    
          initially provided thread to the corporation.  Later, Half Moon             
          Bay stopped providing the corporation with thread because “[Half            
          Moon Bay] would never get [the thread] back” and “it became a big           
          cost”.                                                                      





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