dismissed EB-3 Case: Culinary Arts

identifying data deleted to 
prevent clearly unwarranted 
invasion of personal priv- 
PUBLIC COPY 
U.S. Department of Homeland Security 
20 Mass. Ave., N.W., Rm. A3042 
Washington, DC 20529 
U. S. Citizenship 
and Immigration 
'56 
FILE: EAC 04 142 54014 Office: VERMONT SERVICE CENTER Date: MAR Q 7 2B0[1 
IN RE: Petitioner: 
Beneficiary: 
PETITION: Immigrant petition for Alien Worker as a Sllled Worker or Professional pursuant to section 
203(b)(3) of the Immigration and Nationality Act, 8 U.S.C. fj 1153(b)(3) 
ON BEHALF OF PETITIONER: 
INSTRUCTIONS: 
This is the decision of the Administrative Appeals Office in your case. All documents have been returned to 
the office that originally decided your case. Any further inquiry must be made to that office. 
Robert P. Wiemann, Director 
Administrative Appeals Office 
EAC 04 142 540 14 
Page 2 
DISCUSSION: The preference visa petition was denied by the Director, Vermont Service Center, and is 
now before the Administrative Appeals Office (AAO) on appeal. The appeal will be dismissed. 
The petitioner is a restaurant specializing in Italian cuisine. It seeks to employ the beneficiary permanently in 
the United States as a cook. As required by statute, a Form ETA 750, Application for Alien Employment 
Certification, approved by the Department of Labor, accompanies the petition. The director determined that 
the petitioner had not established that it had the continuing ability to pay the beneficiary the proffered wage 
beginning on the priority date of the visa petition. The director denied the petition accordingly. 
On appeal, counsel submits: 
A brief; and, 
for January 2002-December 2003; 
o 2002-June 20,2001 ; 
o 1-December 2003. 
The regulation 8 C.F.R. 9 204.5(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 in the form of copies of annual 
reports, federal tax returns, or audited financial statements. 
The petitioner must demonstrate the continuing ability to pay the proffered wage beginning on the priority 
date, which is the date the Form ETA 750 Application for Alien Employment Certification, was accepted for 
processing by any office within the employment system of the U.S. Department of Labor. See 8 CFR 
§ 204.5(d). The petitioner must also demonstrate that, on the priority date, the beneficiary had the qualifications 
stated on its Form ETA 750 Application for Alien Employment Certification as certified by the U.S. Department 
of Labor and submitted with the instant petition. Matter of Wing's Tea House, 16 I&N Dec. 158 (Act. Reg. 
Cornrn. 1977). 
Here, the Form ETA 750 was accepted on April 9,2001. The proffered wage as stated on the Form ETA 750 
is $12.59 per hour ($26,187.20 per year). 
The evidence in the record of proceeding shows that the petitioner is structured as a C corporation. On the 
petition, the petitioner claimed to have been established in March 15, 1985, and to currently employ five 
workers. According to the tax returns in the record, the petitioner's fiscal years lasts from January 1 to 
December 3 1. On the Form ETA 750B, signed by the beneficiary on March 22,2001, the beneficiary claimed 
to have worked for the petitioner since January 1996. 
With the petition, the petitioner submitted the following documents: 
Counsel's G-28; 
An original ETA 750; and, 
Copies of the petitioner's Form 1120-A for 2001, and its Form 1120 for 2002. 
EAC 04 142 540 14 
Page 3 
The director denied the petition on September 17, 2004, finding that the evidence submitted with the petition 
did not establish that the petitioner had the continuing ability to pay the proffered wage beginning on the 
priority date. 
On appeal, counsel asserts that, for the year 2001, in determining the petitioner's ability to pay in 2001, the 
director should have added back to net income a $4,237 deduction taken for depreciation, and should have 
considered the petitioner's threefold cash increase from the beginning of 2001, as well as its total asset 
increase and its accounts payable decrease (by a third). Counsel notes the petitioner's return for 2001 shows 
an increase in retained earnings "over the course of the year, showing a positive cash flow." Further, the loan 
from shareholders in Part 111 of the return could as well have been listed as increased capitalization, thereby 
reducing its debt load. Counsel asserts the real amount of total liabilities is actually only $16,080, "a minor 
amount within the scope of the business operation and its real cash flow." 
For the year 2002, counsel asserts the director should have added back a $10,611 deduction taken from net 
income, and the director ignored the 78-percent increase in cash during the year. Treating an $8,046 
shareholder loan as a capital investment would also have improved the petitioner's financial viability. The 
director's narrow focus ignores "the realities of operating a financially viable business." 
Further, the petitioner's two bank accounts demonstrate the petitioner "maintaining four and five digit 
balances in each." 
In determining the petitioner's ability to pay the proffered wage during a given period, Citizenship and 
Immigration Services (CIS) will first examine 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 prima facie proof of the 
petitioner's ability to pay the proffered wage. In the instant case, the petitioner did not establish that it 
employed the beneficiary or paid him a salary in either 2001 or 2002, despite its claim that it has employed 
the beneficiary since January 1996.' 
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, CIS will next examine the net income figure reflected on the petitioner's 
federal income tax return, without consideration of depreciation or other expenses. Reliance on federal 
income tax returns as a basis for determining a petitioner's ability to pay the proffered wage is well 
established by judicial precedent. Elatos Restaurant Corp. v. Sava, 632 F. Supp. 1049, 1054 (S.D.N.Y. 1986) 
(citing Tongatapu Woodcraft Hawaii, Ltd. v. Feldman, 736 F.2d 1305 (9th Cir. 1984)); see also Chi-Feng 
Chang v. Thornburgh, 719 F. Supp. 532 (N.D. Texas 1989); K.C.P. Food Co., Inc. v. Sava, 623 F. Supp. 1080 
(S.D.N.Y. 1985); Ubeda v. Palmer, 539 F. Supp. 647 (N.D. Ill. 1982), aff'd, 703 F.2d 571 (7th Cir. 1983). 
In K. C.P. Food Co., Inc. v. Sava, 623 F. Supp. at 1084, the court held that the Immigration and Naturalization 
Service, now CIS, had properly relied on the petitioner's net income figure, as stated on the petitioner's 
corporate income tax returns, rather than the petitioner's gross income. The court specifically rejected the 
argument that the Service should have considered income before expenses were paid rather than net income. 
The court in Chi-Feng Chang further noted: 
Plaintiffs also contend the depreciation amounts on the 1985 and 1986 returns are non-cash deductions. 
Plaintiffs thus request that the court sua sponte add back to net cash the depreciation expense charged 
for the year. Plaintiffs cite no legal authority for this proposition. This argument has likewise been 
' Counsel does not explain why he did not submit the beneficiary's W-2 Wage and Tax Statements for either year. 
EAC 04 142 54014 
Page 4 
presented before and rejected. See Elatos, 632 F. Supp. at 1054. [CIS] and judicial precedent support 
the use of tax returns and the net incomefigures 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. (Emphasis in original.) Chi-Feng at 537. 
The tax returns demonstrate the following financial information concerning the petitioner's ability to pay the 
proffered wage of $26,187.20 per year from the priority date. 
In 2002, the Form 1 120 stated net income2 of $6,475. 
In 200 1, the Form 1 120-A stated net income3 of $4,62 1. 
Therefore, for the years 2001 and 2002, the petitioner did not have sufficient net income to pay the proffered 
wage. 
If the net income the petitioner demonstrates it had available during that period, if any, added to the wages 
paid to the beneficiary during the period, if any, do not equal the amount of the proffered wage or more, CIS 
will review the petitioner's assets. We reject, however, counsel's insistence that the petitioner's total assets 
should have been considered in the determination of the ability to pay the proffered wage. The petitioner's 
total assets include depreciable assets that the petitioner uses in its business. Those depreciable assets will not 
be converted to cash during the ordinary course of business and will not, therefore, become funds available to 
pay the proffered wage. Further, the petitioner's total assets must be balanced by the petitioner's liabilities. 
Otherwise, they cannot properly be considered in the determination of the petitioner's ability to pay the 
proffered wage. Rather, CIS will consider net current assets as an alternative method of demonstrating the 
ability to pay the proffered wage. 
Net current assets are the difference between the petitioner's current assets and current liabilitie~.~ 
 A 
corporation's year-end current assets are shown on Form 1120 Schedule L, lines 1 through 6; or on Form 
1120-A, Part 111, lines 1 through 6. Its year-end current liabilities are shown on Form 1120, Schedule L, lines 
16 through 18; or on Fonn 1120-A, Part 111, lines 13 and 14. 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. The petitioner's 
net current assets during the year 2001 were $8,622. The petitioner's net current assets during the year 2002 
were $19,594. 
Therefore, from the date the Form ETA 750 was accepted for processing by the U. S. Department of Labor, 
the petitioner had not established that it had the continuing ability to pay the beneficiary the proffered wage as 
of the priority date through an examination of wages paid to the beneficiary, or its net income or net current 
assets. 
Counsel asserts in his brief accompanying the appeal that there is another way to determine the petitioner's 
ability to pay the proffered wage from the priority date. Counsel states that the petitioner maintained sufficient 
cash in its two bank accounts to pay the proffered wage. 
2 
Taxable income before net operating loss deduction and special deductions as reported on Line 28. 
3~axable income before net operating loss deduction and special deductions as reported on Line 24. 
According to Barron's Dictionary of Accounting Terms 117 (3rd 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). Id. at 11 8. 
EAC 04 142 54014 
Page 5 
Counsel's reliance on the balances in the petitioner's bank accounts is misplaced. First, bank statements are 
not among the three types of evidence, enumerated in 8 C.F.R. 9 204.5(g)(2), required to illustrate a 
petitioner's ability to pay a proffered wage. While this regulation allows additional material "in appropriate 
cases," the petitioner in this case has not demonstrated why the documentation specified at 8 C.F.R. 
9 204.5(g)(2) is inapplicable or otherwise paints an inaccurate financial picture of the petitioner. Second, 
bank statements show the amount in an account on a given date, and cannot show the sustainable ability to 
pay a proffered wage. Third, no evidence was submitted to demonstrate that the funds reported on the 
petitioner's bank statements somehow reflect additional available funds that were not reflected on its tax 
return, such as the petitioner's taxable income (income minus deductions) or the cash specified on the 
petitioner's Schedule L and on its Part I11 of the Form 1120-A. that is considered above in determining the 
petitioner's net current assets. 
In any event, in the instant petition, counsel submitted no bank statements for 2001. The record contains no 
explanation for the absence of any bank statements for that year. Therefore, even if the petitioner's evidence 
concerning its bank statements met the criteria described above, the bank statement evidence would fail to 
establish the petitioner's ability to pay the proffered wage from the priority date in 2001. 
Counsel recommends the use of retained earnings to pay the proffered wage. Retained earnings are the total 
of a company's net earnings since its inception, minus any payments to its stockholders. That is, this year's 
retained earnings are last year's retained earnings plus this year's net income. Adding retained earnings to net 
income and/or net current assets is therefore duplicative. Therefore, CIS looks at each particular year's net 
income, rather than the cumulative total of the previous years' net incomes represented by the line item of 
retained earnings. 
Counsel asserts the need for the director to evaluate the petitioner's ability to pay the proffered wage from the 
totality of the petitioner's financial circumstances, particularly given the growth in the petitioner's cash and its 
retained earnings despite a slight increase in shareholder loans. Such an analysis, counsel asserts, will show that 
the petitioner is a viable business and is able to pay the proffered wage. 
Counsel's position recalls Matter of Sonegawa, 12 I&N Dec. 612 (Reg. Comm. 1967). That case relates to a 
petition filed during uncharacteristically unprofitable or difficult years, but only within a framework of profitable 
or successful years. The petitioning entity in Sonegawa had been in business for over 11 years and routinely 
earned a gross annual income of about $100,000. During the year in which the petition was filed in that case, the 
petitioner changed business locations and paid rent on both the old and new locations for five months. There 
were large moving costs and, also, a period of time when the petitioner was unable to do regular business. The 
Regional Commissioner determined the petitioner's prospects for a resumption of successful business operations 
were well established. The petitioner was a fashion designer whose work had been featqred in Time and Look 
magazines. Her clients included Miss Universe, movie actresses, and society matrons. The petitioner's clients 
had been included in the lists of the best-dressed California women. The petitioner lectured on fashion design at 
design and fashion shows throughout the United States and at colleges and universities in California. The 
Regional Commissioner's determination in Sonegawa was based in part on the petitioner's sound business 
reputation and outstanding reputation as a couturiere. 
No unusual circumstances, parallel to those in Sonegawa, have been shown to exist in this case, nor has it been 
established that 2001 was an uncharacteristically unprofitable year for the petitioner. 
Counsel's assertions on appeal cannot be concluded to outweigh the evidence presented in the tax returns as 
submitted by the petitioner that demonstrates that the petitioner could not pay the proffered wage from the day 
EAC 04 142 54014 
Page 6 
the Form ETA 750 was accepted for processing by any office within the employment system of the 
Department of Labor. 
The evidence submitted does not establish that the petitioner had the continuing ability to pay the proffered 
wage beginning on the priority date. 
The burden of proof in these proceedings rests solely with the petitioner. Section 291 of the Act, 8 U.S.C. 
1361. The petitioner has not met that burden. 
ORDER: The appeal is dismissed.