dismissed EB-3 Case: Accounting

U.S. Citizenship 
and Immigration 
Services 
MATTER OF C-&P-F-A-P-, INC. 
APPEAL OF TEXAS SERVICE CENTER DECISION 
Non-Precedent Decision of the 
Administrative Appeals Office 
DATE: OCT. 17, 2017 
PETITION: FORM I-140, IMMIGRANT PETITION FOR ALIEN WORKER 
The Petitioner, a fragrance blending and contract manufacturing business, sought to employ the 
Beneficiary as a systems accountant. It requested classification of the Beneficiary as a professional 
under the third preference immigrant category. See Immigration and Nationality Act (the Act) 
section 203(b)(3)(A)(ii), 8 U.S.C. § 1153(b)(3)(A)(ii). This employment-based immigrant 
classification allows a U.S. employer to sponsor a professional with a U.S. bachelor's degree or its 
foreign equivalent for lawful permanent resident status. 
The petition was initially approved. The Director ofthe Texas Service Center subsequently revoked 
the approval of the petition, concluding that the record did not establish, as required, that the 
Petitioner had the ability to pay the proffered wage. The Petitioner then filed a motion to reopen and 
reconsider, and the Director denied the motions. 
On appeal, the Petitioner submits additional evidence and asserts that it does have the ability to pay 
the proffered wage. 
Upon de novo review, we will dismiss the appeal. 
I. LAW 
Employment-based immigration is generally a three-step process. First, an employer obtains an 
approved ETA Form 9089, Application for Permanent Employment Certification (labor 
certification) from the U.S. Department of Labor (DOL). 1 See section 212(a)(5)(A)(i) of the Act, 
8 U.S.C. § 1182(a)(5)(A)(i). By approving the labor certification, DOL certifies that there are 
insufficient U.S. workers who are able, willing, qualified, and available for the offered position and that 
employing a foreign national in the position will not adversely atTect the wages and working conditions 
of domestic workers similarly employed. Section 212(a)(5)(A)(i)(I)-(Il) of the Act. Second, the 
employer files an immigrant visa petition with U.S. Citizenship and Immigration Services 
(USC IS). See section 204 of the Act, 8 U .S.C. § 1154. Third, if USC IS approves the petition, the 
1 The date the labor certification is filed, in cases such as this one, is called the '"priority date.'' 
Matter ofC-&P-F-A-P-, Inc. 
foreign national applies for an immigrant visa abroad or, if eligible, adjustment of status in the 
United States. See section 245 of the Act, 8 U.S.C. § 1255. 
Section 205 of the Act, 8 U.S.C. § 1155, provides that "[t]he Attorney General [now Secretary, 
Department of Homeland Security], may, at any time, for what he deems to be good and sufficient 
cause, revoke the approval of any petition approved by him under section 204." The realization by 
the director that the petition was approved in error may be good and sufficient cause for revoking the 
approval. Matter of Ho, 19 I&N Dec. 582, 590 (BIA 1988). 
II. ANALYSIS 
After providing notice2 to the Petitioner, the Director revoked the petition's approval, finding that 
the record did not establish the Petitioner's ability to pay the proffered wage. The regulation 
8 C.F.R. § 204.5(g)(2) states in pertinent part: 
Ability of prospective employer to pay wage. Any petitiOn filed by or for an 
employment-based immigrant which requires an offer of employment must be 
accompanied by evidence that the prospective United States employer has the ability 
to pay the proffered wage. The petitioner must demonstrate this ability at the time the 
priority date is established and continuing until the beneficiary obtains lawful 
permanent residence. Evidence of this ability shall be either in the form of copies of 
annual reports, federal tax returns, or audited financial statements. 
In this case, the labor certification was accepted on November 25, 2005, the priority date. The 
proffered wage stated on the labor certification is $41 ,496 per year. 
In determining a petitioner's ability to pay the proffered wage during a given period, USCIS requires 
the petitioner to demonstrate financial resources sufficient to pay the beneficiary's proffered wage. 
USCIS first examines whether the petitioner employed and paid the beneficiary during that period. 
If the petitioner establishes by documentary evidence that it employed the beneficiary at a salary 
equal to or greater than the proffered wage, the evidence will be considered as proof of the 
petitioner's ability to pay the proffered wage. 
Here, the following chart demonstrates the wages the Petitioner paid to the Beneficiary compared to 
the proffered wage of $41,496. 
Wages Paid Shortfall in Wages Paid 
$16,856.12 $24,639.88 
2 The notice of intent to revoke (NOIR) was properly issued pursuant to Matter of Arias, 19 I&N Dec. 568 (BIA 1988) 
and Matter of Estime, 19 I&N Dec. 450 (BIA 1987). Both cases held that a NOIR is properly issued for "good and 
sufficient cause" when the evidence of record at the time of issuance, if unexplained and unrebutted, would warrant a 
denial of the visa petition based upon the petitioner's failure to meet his burden of proof. 
2 
Matter ofC-&P-F-A-P-, Inc. 
2006 $16,852.49 $24,643.51 
2007 $18,001.20 $23,494.80 
2008 $20,234.06 $21,261.94 
2009 $24,558.00 $16,938.00 
2010 $23,721.00 $17,775.00 
2011 $24,205.50 $17,290.50 
2012 $23,235.00 $18,261.00 
2013 $23,750.00 $17,746.00 
2014 $23,058.00 $18,438.00 
2015 $23,727.25 $17,768.75 
Therefore, the Petitioner must establish its ability to pay the shortfall in wages paid from 2005 
through 2015. 
If the petitioner does not establish that it employed and paid the beneficiary an amount at least equal 
to the proffered wage during that period, USCIS will next examine the net income figure reflected 
on the petitioner's federal income tax return, without consideration of depreciation or other 
expenses. River Street Donuts. LLC v. Napolitano, 558 F.3d 111 (1st Cir. 2009). 
The record reflects that the Petitioner is structured as an S corporation. The record contains a copy 
of the Petitioner's tax returns that were submitted to the Internal Revenue Service (IRS) from 2005 
through 2015, which state the following amounts of net income in relation to the shortfall in wages 
paid to the Beneficiary.3 
Year Net Income Shortfall in Wages Paid Years in which the Net 
Income Exceeds the 
Shortfall in Wages Paid 
2005 $3,190.00 $24,639.88 
2006 $3,659.00 $24,643.51 
2007 -$168,280.00 $23,494.80 
2008 $371,694.00 $21,261.94 X 
2009 $170,676.00 $16,938.00 X 
2010 -$195.00 $17,775.00 
3 For an S corporation, USC IS considers net income to be the figure for ordinary income, shown on line 21 of page one 
of the petitioner's IRS Form 1120S. However, where an S corporation has income, credits, deductions or other adjustments 
from sources other than a trade or business, they are reported on Schedule K. If the Schedule K has relevant entries tor 
additional income, credits, deductions or other adjustments, net income is found on Schedule K, line 17e for 2005 and line 18 
for 2006-2014. See Instructions for Form 1120S, at http://www.irs.gov/pub/irs-pdf/ill20s.pdf (last visited 
October I 0, 20 17) (indicating that Schedule K is a summary schedule of all shareholders' shares of the corporation's 
income, deductions, credits, etc.). Because the Petitioner had additional income, credits, deductions, or other adjustments 
shown on its Schedule K for 2005 through 2015, the Petitioner's net income is found on Schedule K of its tax returns for 
these years. 
3 
Matter ofC-&P-F-A-P-, Inc. 
2011 -$25,939.00 $17,290.50 
2012 -$314,579.00 $18,261.00 
2013 -$169,245.00 $17,746.00 
2014 -$208,425.00 $18,438.00 
2015 $215,038.00 $17,768.75 X 
This demonstrates that the Petitioner's net income was only sufficient to cover the shortfall in wages 
paid for 2008,2009, and 2015. 
As an alternate means of determining the petitioner's ability to pay the proffered wage, USCIS may 
review the petitioner's net current assets. Net current assets are the difference between the 
petitioner's current assets and current liabilities.4 A corporation's year-end current assets are shown 
on Schedule L, lines 1 through 6. Its year-end current liabilities are shown on lines 16 through 18. 
If the total of a corporation's end-of-year net current assets and the wages paid to the beneficiary (if 
any) are equal to or greater than the proffered wage, the petitioner is expected to be able to pay the 
proffered wage using those net current assets. Here, the Petitioner's tax returns for 2005 through 
2015 state the following amounts of net current assets in relation to the shortfall in wages paid to the 
Beneficiary. 
Year Net Current Assets Shortfall in Wages Paid Years in Which the Net 
Income Exceeds the 
Shortfall in Wages Paid 
2005 -$70,491.00 $24,639.88 
2006 $17,146.00 $24,643.51 
2007 -$51,960.00 $23,494.80 
2008 $30,499.00 $21,261.94 X 
2009 $45,709.00 $16,938.00 X 
2010 $28,811.00 $17,775.00 X 
2011 -$1,278,262.00 $17,290.50 
2012 -$890,109.00 $18,261.00 
2013 -$1,240,887.00 $17,746.00 
2014 -$475,316.00 $18,438.00 
2015 -$341,475.00 $17,768.75 
This demonstrates that the Petitioner's net current assets were only sufficient to cover the shortfall in 
wages paid in 2008,2009, and 2010 but not for 2005 through 2007 and 2011 through 2015, although 
the Petitioner's net income was sufficient to cover the shortfall in 2015. 
4 According to Barron's Dictionary of Accounting Terms 117 (3d ed. 2000), "current assets" consist of items having (in 
most cases) a life of one year or less, such as cash, marketable securities, inventory and prepaid expenses. "Current 
liabilities" are obligations payable (in most cases) within one year, such accounts payable, short-term notes payable, and 
accrued expenses (such as taxes and salaries). !d. at 118. 
4 
.
Matter ofC-&P-F-A-P-, Inc. 
Therefore, the Petitioner has not established that it had the continuing ability to pay the difference 
between the proffered wage and the wages paid to the Beneficiary in 2005,2006,2007,2011,2012, 
2013, and 2014 through an examination of its net income or net current assets. 
USCIS also considers the overall magnitude of the petitioner's business activities in its 
determination of the petitioner's ability to pay the proffered wage. See Matter ofSonegawa, 12 I&N 
Dec. 612 (Reg'l Comm'r 1967). As in Sonegawa, USCIS may, at its discretion, consider evidence 
relevant to the petitioner's financial ability that falls outside of a petitioner's net income and net 
current assets. USCIS may consider such factors as the number of years the petitioner has been 
doing business, the established historical growth of the petitioner's business, the overall number of 
employees, the occurrence of any uncharacteristic business expenditures or losses, the petitioner's 
reputation within its industry, whether the beneficiary is replacing a former employee or an 
outsourced service, or any other evidence that USCIS deems relevant to the petitioner's ability to 
pay the proffered wage. 
On appeal, the Petitioner states that it has the ability to pay the proffered wage when considered in 
the totality of the circumstances. Specifically, the Petitioner states that the following facts should be 
taken into account with respect to the totality of the circumstances: that it has been doing business 
for over 25 years since 1991, that it has more than 150 employees5, that it has experienced historical 
growth from 2005 to 2015, that it incurred unexpected costs related to business expansion and 
relocation in 2005, 2006, 2007, 2011, 2012, 2013, and 2014, that depreciation stated on its tax 
returns should be added back into net income, and that officer compensation could have been 
reallocated to pay the shortfall in wages paid to the Beneficiary. 
While the Petitioner has demonstrated growth in its gross receipts from 2005 through 2015, the 
record reflects that the Petitioner had very low or negative net income in 2005, 2006, 2007, 2010, 
2011, 2012, 2013, and 2014 with negative net current assets in 2005, 2007, 2011, 2012, 2013, 2014, 
and 2015. We will address depreciation here as the Petitioner states this contributed to low amounts 
of net income on its tax returns. The Petitioner states that depreciation amounts should be added 
back to net income because the depreciation method used the by IRS results in higher deductions 
being taken on its tax returns and thus a lower amount of net income. 
As stated above, USCIS considers net income as shown on the Form 1120S without consideration of 
depreciation or other expenses. River Street Donuts, LLC v. Napolitano, 558 F.3d 111 (I st Cir. 
2009). With respect to depreciation, the court noted: 
The AAO recognized that a depreciation deduction is a systematic allocation of the 
cost of a tangible long-term asset and does not represent a specific cash expenditure 
5 The Petitioner's Quarterly Federal Tax Returns (Form 941) for the first quarter of 2016 state that it has 17 employees, 
whereas the record reflects that the other 135 workers are provided through a 
company which provides temporary staffing services to the Petitioner. It is unclear whether these other workers are full­
time employees, and whether they are permanently employed or contracted on a more temporary basis. 
5 
Matter ofC-&P-F-A-P-, Inc. 
during the year claimed. Furthermore, the AAO indicated that the allocation of the 
depreciation of a long-term asset could be spread out over the years or concentrated 
into a few depending on the petitioner's choice of accounting and depreciation 
methods. Nonetheless, the AAO explained that depreciation represents an actual cost 
of doing business, which could represent either the diminution in value of buildings 
and equipment or the accumulation of funds necessary to replace perishable 
equipment and buildings. Accordingly, the AAO stressed that even though amounts 
deducted for depreciation do not represent current use of cash, neither does it 
represent amounts available to pay wages. 
We find that the AAO has a rational explanation for its policy of not adding 
depreciation back to net income. Namely, that the amount spent on a long term 
tangible asset is a "real" expense. 
River St. Donuts. 558 F.3d at 118. "[USCIS] and judicial precedent suppoti the use of tax returns 
and the net income figures in determining petitioner's ability to pay. Plaintiffs' argument that these 
figures should be revised by the court by adding back depreciation is without support." Chi-FenK 
Chang, 719 F. Supp. at 537 (emphasis added). While the Petitioner states that the IRS income tax 
(cash) method of accounting allows for greater depreciation than the accrual method it uses and 
asserts that this results in a lower amount of net income, USCIS would have accepted tax returns 
prepared pursuant to the accrual method of accounting if those were the tax returns the Petitioner had 
actually submitted to the IRS. Here, the Petitioner's tax returns were prepared pursuant to the cash 
method of accounting in which revenue is recognized when it is received and expenses are 
recognized when they are paid. See http://www.irs.gov/publications/p538/ar02.html#d0e 1136 (last 
visited October 10, 20 17). We are not persuaded by an analysis in which the Petitioner seeks to rely 
on tax returns prepared pursuant to one method but then seeks to shift revenue or expenses from one 
year to another as convenient to the Petitioner's present purpose.6 Therefore, the amounts shown on 
the Petitioner's tax returns shall be considered as they were submitted to the IRS. 
The Petitioner also states that the amounts paid in officer compensation as stated on the tax returns 
could have been reallocated to pay the shortfall in wages paid to the Beneficiary. Shareholders of an 
S corporation have the authority to allocate the expenses of that corporation for various legitimate 
business purposes where the record reflects that the shareholder is willing and able to forgo that 
income. Of the years at issue, 2005 through 2007 and 2011 through 2014, the following chart shows 
the amount of officer compensation and the number of shareholders listed on the Form 1120S. 
Year Amount of Officer Compensation Numher of Shar·eholdcrs 
2005 $100,000 2 
2006 $46,180 ., 
.) 
6 Once a taxpayer has set up its accounting method and filed its first return, it must receive approval from the IRS before 
it changes from the cash method to an accrual method or vice versa. See http://www.irs.gov/ 
publications/p538/ar02.html#d0e2874 (last visited October I 0, 20 17). 
Matter ofC-&P-F-A-P-. Inc. 
2007 $117,100 , 
_) 
2011 $30,000 10 
2012 $116,000 9 
2013 None N//\ 
2014 None N//\ 
Here, the record does not contain evidence showing that payments were actually made, evidence to 
indicate that these shareholders were personally willing to forgo any portion of officer compensation 
or their financial ability to do so. Additionally, in two of the years at issue no compensation was 
paid and therefore cannot be reallocated. As such, the Petitioner has not established that officer 
compensation could have been reallocated to pay the shortfall in wages paid to the Beneficiary. 
The Petitioner states that that the costs of expansion and relocation should be considered in the 
analysis of the totality of the circumstances in 2005, 2006, 2007, 201 L 2012, 2013, and 2014. Here, 
the costs of expansion and relocation of the Petitioner's business have been stretched over many 
years and it is unclear as to the extent of these costs and what portion of these expenses were 
uncharacteristic costs or losses that resulted in setbacks to the Petitioner's financial outlook in any 
given year. The fact that the expenses stretch over almost a decade indicates that these are not 
uncharacteristic expenses, but rather normal costs of doing business. Therefore, we find that the 
Petitioner has not demonstrated its ability to pay the proffered wage in the totality of the 
circumstances. 
III. CONCLUSION 
The Petitioner has not established that it has had the ability to pay the proffered wage to the 
Beneficiary from the priority date onward through an examination of wages paid to the Beneficiary, 
net income, net current assets, or the totality of the circumstances. 
ORDER: The appeal is dismissed. 
Cite as Matter ofC-&P-F-A-P-. Inc., ID# 591939 (AAO Oct. 17, 2017)