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Moreover, petitioners did not issue invoices or receipts to
customers.14 A customer’s only proof of purchase from ERE was a
notation of the species on the canceled check. Although Mrs.
Knudsen testified that petitioners kept a record of animal sales
on Quickbooks, the record provides almost no details regarding
petitioners’ animal sales.
Petitioners’ Marketing Activities
Petitioners conducted very little marketing and advertising
for ERE. Petitioners reported advertising expenses during only 1
year of operation.15 Mrs. Knudsen was unable to explain why
petitioners claimed advertising expenses in only 1 year. She
testified that petitioners had advertising expenses in 2000 or
2001, but the record does not indicate that petitioners paid for
advertising in those years.
Petitioners publicized their animals in trade journals and
through animal breeding organizations. For example, Mrs. Knudsen
listed ERE in the ISZ breeders’ directory, and she made contacts
in the exotic animal business through membership in EWA and by
attending auctions. Although Mrs. Knudsen testified that she
belongs to these organizations to help her establish a good
reputation in the exotic animal business, petitioners did not
14Petitioners issued a receipt to only one buyer.
15In 1996, petitioners reported $4,030 in advertising
expenses on their Federal income tax return.
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Last modified: March 27, 2008