I. Introduction
Pratt Industries is America’s 5th largest corrugated packaging company and the world’s largest privately held 100% recycled paper and packaging company. Its supply chain continues through a series of sheet plants, full-line of corrugated box factories and display facilities through …show more content…
Commissioner, T.C. Memo. 1997-27, the Internal Revenue Service disallowed 83 percent of the taxpayer’s cash purchases of scrap metal because the names of the sellers were missing from the receipts and the Service could not verify the transactions. The judge acknowledged that taxpayers are expected to maintain adequate records to substantiate their deductions. However, the judge cited Cohan v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930) and held that the taxpayer was entitled to include 95 percent of its calculation of cash scrap purchases. In Cohan it was held that when taxpayers do not have adequate records, but when the record suggests that they clearly incurred an offset to gross income, courts might estimate the offset based on the