dismissed EB-3 Case: Mechanical Engineering

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PUBLIC COPY 
U.S. Department of Homeland Security 
20 Mass, N.W. Rm. A3000 
Washington, DC 20529 
U. S. Citizenship 
and Immigration 
% 
FILE: EAC 04 157 532 15 Office: CALIFORNIA SERVICE CENTER Date: SEP 0 5 2006 
IN RE: 
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. 3 1 153(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, Chief 
Administrative Appeals Office 
EAC 04 157 53215 
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 general machining and manufacturing corporation. It seeks to employ the beneficiary 
permanently in the United States as a mechanical designer. 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. 
Section 203(b)(3)(A)(i) of the Immigration and Nationality Act (the Act), 8 U.S.C. 5 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. 
Section 203(b)(3)(A)(iii) of the Immigration and Nationality Act (the Act), 8 U.S.C. 8 1153(b)(3)(A)(iii), 
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 unskilled labor, not of a temporary or 
seasonal nature for which qualified workers are unavailable. 
The regulation at 8 C.F.R. 5 204.5(g)(2) states in pertinent part: 
Abiliv 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. Comm. 1977). 
Here, the Form ETA 750 was accepted on December 4, 2001.' The proffered wage as stated on the Form 
ETA 750 is $22.93 per hour ($47,694.40 per year). The Form ETA 750 stated that the position requires 4 
year of experience. 
The petitioner was filed for the "Other worker" classification requiring no job experience, but the labor 
certification requested four years of job experience as a mechanical designer and a "BSME" college degree in 
mechanical engineering. The director followed the certified Alien Employment Application requirements and 
considered the petition under the professional/skilled worker classification. 
EAC 04 157 53215 
Page 3 
With the petition, counsel submitted copies of the following documents: the original Form ETA 750, 
Application for Alien Employment Certification, approved by the U.S. Department of Labor; and, copies of 
documentation concerning the beneficiary's qualifications as well as other documentation. 
On appeal, counsel submits a statement and additional evidence. 
Because the director determined, inter alia, the evidence submitted with the petition was insufficient to 
demonstrate the petitioner's continuing ability to pay the proffered wage beginning on the priority date, 
consistent with 8 C.F.R. 9 204.5(g)(2), the director requested on September 7, 2004, pertinent evidence of the 
petitioner's ability to pay the proffered wage beginning on the priority date. 
The director requested evidence in the form of copies of annual reports, U.S. federal tax returns with signatures 
and dates, and audited financial statements for 2001, 2002, and 2003. The director also requested that the 
petitioner provide copies of the beneficiary's W-2 Wage and Tax Statements for the same period. 
In response to the request for evidence, counsel submitted copies of the following documents: the beneficiary's 
the petitioner's U.S. Internal Revenue Service (IRS) Form 1120 tax returns for years 2001,2002 and 2003. 
The director denied the petition on November 23, 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, counsel asserts the director abused her discretion, the director's decision was arbitrary and 
capricious, and, that the petitioner's income and assets are sufficient to "support the applicant's income [i.e. 
the proffered wage]. 
Counsel has submitted the following documents to accompany the appeal statement: a cover letter; a copy of 
I-797C Notice of Action; an "Attorney Affirmation"; and, a letter from petitioner's attorney. 
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. 
EAC 04 157 53215 
Page 4 
The tax returns demonstrated the following financial information concerning the petitioner's ability to pay the 
proffered wage of $47,694.40 per year from the priority date of December 4,2001 : 
In 2001, the Form 1120 stated taxable income2 of $2,017.00. 
In 2002, the Form 1 120 stated taxable income of $2,119.00. 
In 2003, the Form 1 120 stated taxable income of $10,899.00. 
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 2001 through 2003 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 liabilitie~.~ A 
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 1120 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 1120 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 1120 return stated current assets of $66,708.00 and $231,317.00 in 
current liabilities. Therefore, the petitioner had <$164,609.00>~ in net current assets. Since 
the proffered wage is $47,694.40 per year, this sum is less than the proffered wage. 
In 2002, petitioner's Form 1 120 return stated current assets of $42,424.00 and $3 12,051 .OO in 
current liabilities. Therefore, the petitioner had <$269,627.00> in net current assets. Since 
the proffered wage is $47,694.40 per year, this sum is less than the proffered wage. 
In 2003, petitioner's Form 1120 return stated current assets of $600.00 and $348,904.00 in 
current liabilities. Therefore, the petitioner had <$348,304.00> in net current assets. Since 
the proffered wage is $47,694.40 per year, this sum is less than the proffered wage. 
Therefore, for the period 2001 through 2003 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. 
2 
 IRS Form 1 120, Line 28. 
3 
 According to Barron 's Dictionary of Accounting Terms 1 17 (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 as accounts 
payable, short-term notes payable, and accrued expenses (such as taxes and salaries). Id. at 118. 
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. 
EAC 04 157 53215 
Page 5 
Counsel asserts in his "Attorney Affirmation" 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,5 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, counsel introduced a letter from the petitioner's accountant dated March 18, 2005, that states in 
pertinent part that the petitioner's tax return for May 1, 2002 through April 30, 2003 was prepared on a cash 
basis. That accountant who made use of a depreciation deduction of $21 1,990.00 states that but for that 
deduction of a non-cash expense the petitioner's taxable income would have been higher. Also, petitioner's 
counsel advocates the addition of depreciation taken as a deduction in those years' tax returns to eliminate the 
abovementioned deficiencies. Since depreciation is a deduction in the calculation of taxable income on tax 
Form 1 120, this method would eliminate depreciation as a factor in the calculation of taxable income. 
There is established legal precedent against counsel's contention that depreciation may be a source to pay the 
proffered wage. The court in Chi-Feng Chang v. Thornburg, 719 F. Supp. 532 (N.D. Tex. 1989) noted: 
Plaintiffs also contend that 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 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. (Original emphasis.) Chi-Feng at 
537. 
As stated above, following established legal precedent, CIS relied on the petitioner's net income without 
consideration of any depreciation deductions, in its determinations of the ability to pay the proffered wage on 
and after the priority date. 
Counsel contends in the Attorney Affirmation "That Soldream, Inc. is a multi million dollar company that 
employs 12 full time employees in the US, . . . is a profitable corporation . . . ." In the totality of all the 
evidence submitted in this case, there is evidence to demonstrate that the petitioner's business was in a 
modestly profitable period in 2001, 2002 and 2003. For the years 2001 through 2003, the taxable income for 
the petitioner was flat in 200 1 and 2002 earning $2,0 17.00 and $2,119.00 respectively. In 2003, the Form 1 120 
stated taxable income of $10,899.00 that is still below the proffered wage of $47,694.40 per year. 
The net current asset value for those years is increasingly negative, <$164,609.00>, <$269,627.00>, and, 
<$348,304.00> respectively for the years 2001,2002 and 2003. 
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 
' 8 C.F.R. 3 204.5(g)(2). 
EAC 04 157 53215 
Page 6 
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. 
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 proven its ability to pay the proffered wage. 
Petitioner's accountant, in the same letter mentioned above, makes a comparison between the cash and 
accrual basis of accounting for the petitioner's profits. She states in pertinent part, " . . . I can only make an 
assumption with regard to the loss of $107,792 I assume that the loss is on the accrual basis." While the 
accountant's letter is not clear. The petitioner's tax return for May 1, 2002 through April 30, 2003 was 
prepared pursuant to a cash convention, in which revenue is recognized when it is received, and expenses are 
recognized when they are paid. This office would, in the alternative, have accepted tax returns prepared 
pursuant to accrual convention, if those were the tax returns the petitioner had actually submitted to IRS. 
This office is not, however, persuaded by an analysis in which the petitioner, or anyone on its behalf, 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. If revenues are not recognized in a given year 
pursuant to the cash accounting then the petitioner, whose taxes are prepared pursuant to cash rather than 
accrual, and who relies on its tax returns in order to show its ability to pay the proffered wage, may not use 
those revenues as evidence of its ability to pay the proffered wage during that year. Similarly, if expenses are 
recognized in a given year, the petitioner may not shift those expenses to some other year in an effort to show 
its ability to pay the proffered wage pursuant to some hybrid of accrual and cash accounting. The amounts 
shown on the petitioner's tax returns shall be considered as they were submitted to IRS, not as amended 
pursuant to the accountant's adjustments. If the accountant wished to persuade this office that accrual 
accounting supports the petitioners continuing ability to pay the proffered wage beginning on the priority 
date, then the accountant was obliged to prepare and submit audited financial statements pertinent to the 
petitioning business prepared according to generally accepted accounting principles. 
The evidence submitted does not establish that the petitioner had the continuing ability to pay the proffered 
wage beginning on the priority date. 
Counsel'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. 
5 136 1. The petitioner has not met that burden. 
ORDER: The appeal is dismissed. 
EAC 04 157 53215 
Page 7