dismissed EB-3 Case: Martial Arts

U.S. Department of Homeland Security 
20 Mass, N W. Rm. A3042 
Washington, DC 20529 
U.S. Citizenship 
and Immigration 
Services 
PETITION: Immigrant petition for Alien Worker as a Skilled Worker or Professional pursuant to 
section 203(b)(3) of the Immigration and Nationality Act, 8 U.S.C. 
 1 153(b)(3) 
ON BEHALF OF PETITIONER: 
SELF-REPRESENTED 
INSTRUCTIONS: 
This is the decision of the Administrative Appeals Ofice 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. 
kobert P. Wiemann, ~irector 
Administrative Appeals Office 
Page 2 
DISCUSSION: The preference visa petition was denied by the Director, Vermont Service Center, and is 
now before the Administrative Appeals Office on appeal. The appeal will be dismissed. 
The petitioner is a marital arts school. It seeks to employ the beneficiary permanently in the United States as 
an assistant teacher. As required by statute, the petition is accompanied by a Form ETA 750, Application for 
Alien Employment Certification, approved by the U. S. Department of Labor. 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, the petitioner submits an explanatory letter and additional evidence. 
Section 203(b)(3)(A)(i) of the Immigration and Nationality Act (the Act), 8 U.S.C. $ 1153(b)(3)(A)(i), 
provides for the granting of preference classification to qualified immigrants who are capable, at the time of 
petitioning for classification under this paragraph, of performing skilled labor (requiring at least two years 
training or experience), not of a temporary nature, for which qualified workers are not available in the United 
States. 
The regulation at 8 C.F.R. 8 204.5(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. 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. Cornm. 1977). 
Here, the Form ETA 750 was accepted on April 30, 2001. The proffered wage as stated on the Form ETA 
750 is $1 1.33 per hour ($23,566.40 per year). The Form ETA 750 states that the position requires two years 
experience. 
With the petition, petitioner submitted copies of the following documents: the original Form ETA 750, 
Application for Alien Employment Certification, approved by the U.S. Department of Labor; information 
concerning a credit line; checks to corporation officers; excerpts from New York State statutory law, books on 
annual reports and amortization; company information; the petitioner's annual report; and tax returns. 
The director denied the petition on August 4,2004, finding that the evidence submitted did not establish that 
the petitioner had the continuing ability to pay the proffered wage beginning on the priority date. 
On appeal, petitioner asserts that it has funds/revenues available to pay the proffered wage. Further, the 
petitioner contends that the director did not consider the following submitted evidence: cash flow statements; 
submitted excerpts of legal publications with legal treatises; and, asserts that the petitioner is a "viable and 
growing" business. 
Petitioner has submitted the following copies of documents to accompany the appeal statement: an 
explanatory letter; an excerpt on evidence to determine the ability to pay wages; 30 pages of statements 
entitled "Cash Flow on a Timeline Line, Sources and Uses of Funds" for 2001; an article entitled "Customers: 
The Key to Survival of any Business;" excerpts from legal articles; and, the director's decision dated August 
4,2004. 
In determining the petitioner's ability to pay the proffered wage during a given period, U.S. 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. No evidence was submitted to show that the petitioner 
employed the beneficiary. 
Alternatively, in determining the petitioner's ability to pay the proffered wage, CIS will 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), affd, 703 
F.2d 571 (7th Cir. 1983). In K.C.P. Food Co., Inc. v. Sava, the court held that the Service 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. Supra at 1084. The court specifically rejected the argument that CIS should have 
considered income before expenses were paid rather than net income. Finally, no precedent exists that would 
allow the petitioner to "add back to net cash the depreciation expense charged for the year." Chi-Feng Chang 
v. Thornburgh, Supra at 537. See also Elatos Restaurant Corp. v. Sava, Supra at 1054. 
The tax returns demonstrated the following financial information concerning the petitioner's ability to pay the 
proffered wage of $23,566.40 per year from the priority date of April 30,2001: 
In 2001, the Form 1 120s stated taxable income of $625.00. 
In 2002, the Form 1120s stated taxable income of $38.00. 
The petitioner's net current assets can be considered in the determination of the ability to pay the proffered 
wage especially when there is a failure of the petitioner to demonstrate that it has taxable income to pay the 
proffered wage. In the subject case, as set forth above, the petitioner did not have taxable income sufficient to 
pay the proffered wage at any time between the years 2000 through 2001 for which the petitioner's tax returns 
are offered for evidence. 
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 liabilities.' A 
- 
1 
 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 
Page 4 
corporation's year-end current assets are shown on Schedule L, lines 1 through 6. That schedule is included 
with, as in this instance, the petitioner's filing of Form 1120s federal tax return. The petitioner's year-end 
current liabilities are shown on lines 16 through 18. If a corporation's end-of-year net current assets are equal 
to or greater than the proffered wage, the petitioner is expected to be able to pay the proffered wage. 
Examining the Form 1120s U.S. Income Tax Returns submitted by the petitioner, Schedule L found in each 
of those returns indicates the following: 
In 2001, petitioner's Form 1 120s return stated current assets of $285.00 and $21,241 .OO in 
current liabilities. Therefore, the petitioner had <$20,956.00>' in net current assets. Since 
the proffered wage is $23,566.40 per year, this sum is less than the proffered wage. 
In 2002, petitioner's Form 1120s return stated current assets of $376.00 and $18,332.00 in 
current liabilities. Therefore, the petitioner had <$17,956.00> in net current assets. Since the 
proffered wage is $23,566.40 per year, this sum is less than the proffered wage. 
Therefore, for the period 2001 through 2002 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 ability to pay the beneficiary 
the proffered wage at the time of filing through an examination of its net current assets. 
Petitioner asserts in its explanatory letter accompanying the appeal that there are other ways to determine the 
petitioner's ability to pay the proffered wage from the priority date. According to regulation: copies of 
annual reports, federal tax returns, or audited financial statements are the means by which petitioner's ability 
to pay is determined. 
On appeal, petitioner asserts that it has fundslrevenues available to pay the proffered wage. As recited above, 
the petitioner's tax returns for 2001 and 2002 stated taxable income of $625.00 and $38.00. Net current 
assets are negative, <$20,956.00> and <$17,956.00>. 
The petitioner asserts that its cash flow statements are evidence of its ability to pay the proffered wage. In 
generally accepted accounting principles (GAAP) based cash flow statement the sources of cash are disclosed. 
The general categories are cash received from operations, and, investments and borrowings.4 A cash flow 
statement, used with the balance sheet and income statement, present an analysis of the financial health of a 
business. While the cash flow statements are not part of an audited financial statement, they do state an item 
entitled "Funds Aval. To Pay Salaries of Unfilled Positions" that recurs on a monthly basis. The cash flow 
statement had items for "Previous Balance," "Revenue," and sometimes "Officer Compensation" and 
"Additional Advertising/Recruitment." It is apparent that the cash flow statements were internally generated 
to show the ability to pay but not part of an audited financial statement. It contradicts in part the very small 
end-of-year cash balances stated in the 2001 and 2002 tax returns, $285.00 and $376.00. There is no 
explanation of this discrepancy or sufficient information of the sources of assets and liabilities provided in the 
cash flow statement to make an informed decision concerning the ability to pay. 
expenses. "Current liabilities" are obligations payable (in most cases) within one year, such as accounts 
payable, short-term notes payable, and accrued expenses (such as taxes and salaries). Id. at 11 8. 
2 
 The symbols <a number> indicate a negative number, or in the context of a tax return or other financial 
statement, a loss, that is below zero. 
' 8 C.F.R. 8 204.5(g)(2). 
4 
 Other sources of cash can be from the sale of stock, the sale of assets, collections of account receivable, 
conversion of marketable securities to cash, short term financing, issuance of bonds and long-term liabilities. 
The petitioner has provided excerpts of legal publications with legal treatises of how best to demonstrate the 
ability to pay the proffered wage by citing prior AAO decisions as evidence of its ability to pay the proffered 
wage. Prior AAO decisions are not precedent. The petitioner has failed to identie specifically any erroneous 
conclusion of law, or to relate the case precedent to the present factual circumstances in this matter. 
Petitioner contends that the petitioner is a "viable and growing" business that is evidence of its ability to pay 
the proffered wage. In the totality of all the evidence submitted in this case, there is evidence to demonstrate 
that the petitioner's business was in an unprofitable period in 2001 and 2002. For the years 2001 through 
2002, the taxable income for the petitioner was $625.00 and $38.00. The net current asset value for those 
years is negative. <$20,956.00> and <$17,956.00>. According to regulation, the best evidence of the ability 
to pay is audited financial statement, tax returns, and, annual reports according to the regulation at 8 C.F.R. 
6 204.5(g)(2). 
The petitioner's suggestion that its income could be augmented with a line of credit will not be considered for 
two reasons. First, since a line of credit is a "commitment to loan" and not an existent loan, the petitioner has 
not established that the unused funds from the line of credit are available at the time of filing the petition. As 
noted above, a petitioner must establish eligibility at the time of filing; a petition cannot be approved at a future 
date after the petitioner becomes eligible under a new set of facts. See Matter of Katigbak, 14 I&N Dec. 45, 49 
(Comm. 1971). Second, the petitioner's existent loans will be reflected in the balance sheet provided in the tax 
return or audited financial statement and will be fully considered in the evaluation of the corporation's net 
current assets. Comparable to the limit on a credit card, the line of credit cannot be treated as cash or as a cash 
asset. 
However, if the petitioner wishes to rely on a line of credit as evidence of ability to pay, the petitioner must 
submit documentary evidence, such as a detailed business plan and audited cash flow statements, to 
demonstrate that the line of credit will augment and not weaken its overall financial position. Finally, CIS will 
give less weight to loans and debt as a means of paying salary since the debts will increase the firm's liabilities 
and will not improve its overall financial position. Although lines of credit and debt are an integral part of any 
business operation, CIS must evaluate the overall financial position of a petitioner to determine whether the 
employer is making a realistic job offer and has the overall financial ability to satisfy the proffered wage. See 
Matter of Great Wall, 16 I&N Dec. 142 (Acting Reg. Comm. 1977). 
Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967), relates to petitions filed during uncharacteristically 
unprofitable or difficult years but only in 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 that the petitioner's prospects for a resumption of successful business operations were well 
established. The petitioner was a fashion designer whose work had been featured 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. 
Page 6 
Unusual and unique circumstances have not been shown to exist in this case to parallel those in Sonegawa, to 
establish that the period examined was an uncharacteristically unprofitable period for the petitioner. By the 
evidence presented, the petitioner has not proved its ability to pay the proffered wage. 
The evidence submitted does not establish that the petitioner had the continuing ability to pay the proffered 
wage beginning on the priority date. 
Petitioner's contentions cannot be concluded to outweigh the evidence presented in the corporate tax returns 
as submitted by petitioner that shows that the petitioner has not demonstrated its ability to pay the proffered 
wage from the day the Form ETA 750 was accepted for processing by any office within the employment 
system of the Department of Labor. 
The burden of proof in these proceedings rests solely with the petitioner. Section 291 of the Act, 8 U.S.C. 
5 1361. The petitioner has not met that burden. 
ORDER: The appeal is dismissed.