dismissed EB-3 Case: Social Services

1denWiying data deleted to 
- prevent dearly unwarranted 
invasion d personal prfvaey 
U.S. Department of Homeland Security 
20 Mass Ave., N.W., Rm. A3042, 
Washington, DC 20529 
PUBLIC COPY 
Date: MAY 2 3 2006 
WAC 03 101 54195 
PETITION: 
 Immigrant Petition for Alien Worker as an Unskilled Worker Pursuant to Section 203(b)(3) 
of the Immigration and Nationality Act, 8 U.S.C. 9 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 orignally decided your case. Any hrther inquiry must be made to that office. 
-Wy&IQ 
Robert P. Wiemann, Chief 
Administrative Appeals Office 
DISCUSSION: The preference visa petition was denied by the Director, California Service Center, and is 
now before the Administrative Appeals Office (AAO) on appeal. The appeal will be dismissed. 
The petitioner is a residential treatment center. It seeks to employ the beneficiary permanently in the United 
States as a member of the direct care staff. As required by statute, a Form ETA 750, Application for Alien 
Employment Certification approved by the Department of Labor, accompanied the petition. The director 
determined that the petitioner had not established that she had the continuing ability to pay the beneficiary the 
proffered wage beginning on the priority date of the visa petition and denied the petition accordingly. 
On appeal, counsel submits additional evidence and asserts that the petitioner has established her continuing 
financial ability to pay the proffered wage. 
Section 203(b)(3)(A)(iii) of the Immigration and Nationality Act (the Act), 8 U.S.C. 3 1153(b)(3)(A)(iii), 
provides for the granting of preference classification to other qualified illunigrants who are capable, at the time of 
petitioning for classification under this paragraph, of performing unslulled labor, not of a temporary or seasonal 
nature, for which qualified workers are not available in the United States. 
The regulation at 8 C.F.R. tj 204.5(g)(2) states, in pertinent part: 
Ability ofprospective employer to pay wage. Any petition filed by or for an employrnent- 
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, the day the Form ETA 750 was accepted for processing by any office within the employment system of 
the Department of Labor. See 8 CFR § 204.5(d). Here, the Form ETA 750 was accepted for processing on 
December 5, 1997. The proffered wage as stated on the Form ETA 750 is $8.51 per hour, which amounts to 
$17,700.80 annually. The beneficiary indicates on her ETA 750B, which she signed on October 22, 1997, 
that she has volunteered at the petitioning business since December 1992. 
On Part 5 of the preference petition, filed on February 11, 2003, the petitioner claims that it was established 
on January 9, 1989, has a gross annual income of approximately $300,000, a variable net annual income, and 
that it employs seven workers. 
As suggested by the record, the petitioner is structured as a sole proprietorship. As evidence of its ability to 
pay the proffered salary, the petitioner initially submitted copies of the sole proprietor's individual federal 
income tax returns for 1998 through 200 1. These returns indicate that the sole proprietor files her tax returns 
jointly with her spouse and declares no dependents. 
The tax returns reflect the following information for the following years: 
Page 3 
Sole Proprietor's adjusted gross income (Form 1040) 
 -$ 72,522 -$ 75,830 -$ 71,945 -$80,072 
Net Operating Loss Carryover (Form 1040) 
 -$ 63,930 -$ 72,571 -$ 76,020 -$76,020 
Petitioner's gross income (Schedule C) $202,770 $255,894 $348,976 $313,864 
Petitioner's wages paid (Schedule C) $ 40,333 $ 87,191 $131,314 $104,827 
Petitioner's net profit from business (Schedule C) -$ 1,330 $ 3,786 $ 3,665 -$ 8,279 
Petitioner's business income or loss (Form 1040) -$ 1,330 $ 3,786 $ 3,665 -$ 8,279 
Together with these tax returns, the petitioner submitted a letter, dated August 9, 2002, and signed by the 
petitioner's accountant, letter refers to the sole proprietor's 2000 
individual tax return and states that although the return reflected a loss, it does not represent the actual cash 
outlay, due to such deductions allowed to be taken by the Internal Revenue Service (IRS), and also that the 
return reflects the carryover of net operating losses generated in prior years. 
On January 23, 2004, because the evidence submitted was deemed insufficient to demonstrate the petitioner's 
continuing ability to pay the proffered wage, the director requested additional evidence pertinent to that 
ability. In accordance with 8 C.F.R. 9 204.5(g)(2), the director requested that the petitioner provide copies of 
annual reports, federal tax returns, or audited financial statements to demonstrate its continuing ability to pay 
the proffered wage beginning on the priority date. The director specifically requested that the petitioner 
provide copies of its federal tax returns for 1997, 2002, and 2003. The director also instructed the petitioner 
to submit copies of the beneficiary's Wage and Tax Statements (W-2) if the petitioner has employed her from 
1997 to 2003. The director further requested that the petitioner provide a summary of the sole proprietor's 
monthly household expenses and advised the petitioner that if the sole proprietor will use personal assets to 
pay the proffered salary, then evidence must be provided showing that she is in the possession of sufficient 
assets to continuously pay the wage. The director also requested the petitioner to provide copies of the last 
eight state quarterly wage reports that it had filed. 
In response, the petitioner submitted copies of the sole proprietor's Form 1040, U.S. Individual Income Tax 
Return for 1997 and 2002. They contain the following information: 
1997 2002 
Sole Proprietor's adjusted gross income (Form 1040) -$ 63,842 -$ 96,998 
Net Operating Loss Carryover (Form 1040) -$ 42,230 -$ 80,123 
Petitioner's gross income (Schedule C) $ 155,470 $ 358,447 
Petitioner's wages paid (Schedule C) $ 3 1,025 $ 163,181 
Petitioner's net profit from business (Schedule C) -$ 2,806 -$ 19,351 
Petitioner's business income or loss (Form 1040) -$ 2,806 -$ 19,351 
Counsel's transmittal letter accompanying the response indicates that the sole proprietor's 2003 tax return was 
not yet available, however she submitted a copy of the beneficiary's 2003 W-2, which is represented as the 
beneficiary's first paid employment by the petitioner. The 2003 W-2 shows that she earned $7,636.39. The 
submitted state quarterly wage reports indicate that the petitioner has employed her part-time. According to a 
personal expenditures chart encompassed within an attached analysis submitted with another letter, dated 
April 5,2004, from the sole proprietor's annualized household expenses for the years from 1997 
to 2002 were $55,287 for 1997; $48,482 for 1998; $74,619 for 1999; $75,824 for 2000; $106,030 for 2001; 
and $89,150 for 2002. 
letter also advocates adding back to the sole proprietor's income various non-cash deductions 
such as depreciation, car and truck expenses, as well as tax excludable foster care payments received, which 
have been reflected under the expenses listed under Part I1 of the sole proprietor's Schedule C, Profit or Loss 
from Business, along with the net loss carryover enerated by previous years' operations as shown on line 21 
of the pertinent Form 1040. As set forth by as well as an accompanying copy of Section 13 1 of 
the Internal Revenue Code (IRC), this provision allows a business who received qualified foster care 
payments from the state to exclude this amounts from their gross income, thus representing monies which are 
not reflected as part of a sole proprietors' income on hisher tax returns. The excludable amounts (referenced 
on Part V of the tax returns) include the following: 
The sole proprietor's household expenses are reflected within the petitioner's response to the director's 
request for evidence. They are shown as: 
The director determined that the evidence submitted did not establish that the petitioner had the continuing 
ability to pay the proffered wage beginning on the priority date, and, on July 9,2004, denied the petition. The 
director determined that after considering reasonable living expenses, the remaining funds reflected by the 
sole proprietor's adjusted gross income were insufficient to pay the proffered wage. The director noted that 
he would not add back expensed funds and deductions taken on the federal tax return in order to amve at a 
petitioner's ability to pay a proffered wage. The director noted that in each of the years between 1997 and 
2002, the sole proprietor's adjusted gross income was insufficient to cover the proffered wage after 
consideration of the payment of the household living expenses. 
On appeal, counsel resubmits the documentation provided to the underlying record and asserts that CIS 
should recognize the addition back to the petitioner's net income of various deductions that the sole proprietor 
took on her tax returns based on what is characterized as "non-cash" expenditures to amve at a "net cash" 
figure that reflects the petitioner's ability to pay the proffered salary of $17,700.80. 
Counsel's assertions are not persuasive. 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 
may have 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. As mentioned, the 
Page 5 
only evidence of wages paid to the beneficiary is indicated by the beneficiary's 2003 W-2, showing that the 
petitioner paid the beneficiary $7,636.39, or $10,064.41 less than the proffered wage. 
When CIS examines a petitioner's net income during a given period, it reviews the figure reflected on a 
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. 111. 1982), afd, 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 nct income. 
The petitioner is a sole proprietorship, a business in which one person operates the business in his or her 
personal capacity. Black's Law Dictionary 1398 (7th Ed. 1999). Unlike a corporation, a sole proprietorship 
does not exist as an entity apart from the individual owner. See Matter of United Investment Group, 19 I&N 
Dec. 248, 250 (Comm. 1984). Therefore the sole proprietor's adjusted gross income, personal cash or cash 
equivalent assets and personal liabilities are also considered as part of the petitioner's ability to pay. Sole 
proprietors report income and expenses from their businesses on their individual (Form 1040) federal tax 
return each year. The business-related income and expenses are reported on Schedule C and are carried 
forward to the first page of the tax return. Sole proprietors must show that they can cover their existing 
business expenses as well as pay the proffered wage out of their adjusted gross income or other available 
funds. In addition, sole proprietors must show that they can sustain themselves and their dependents. Ubeda 
v. Palmer, 539 F. Supp. 647 (N.D. Ill. 1982), aff'd, 703 F.2d 571 (7h Cir. 1983). 
In Ubeda, 539 F. Supp. at 650, the court concluded that it was highly unlikely that a petitioning entity 
structured as a sole proprietorship could support himself, his spouse and five dependents on a gross income of 
slightly more than $20,000 where the beneficiary's proposed salary was $6,000 or approximately thirty 
percent (30%) of the petitioner's gross income. 
It is noted that a depreciation expense taken as a deduction does not require or represent cash expenditure 
during the year claimed. It is a systematic allocation of the cost of a tangible long-term asset. It may be taken 
to represent the diminution in value of buildings and equipment, or to represent the accumulation of funds 
necessary to replace perishable equipment and buildings. However, the cost of equipment and buildings and 
the value lost as they deteriorate still represents an actual expense of doing business. The court in Chi-Feng 
Chang further 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 income Jigures in determining petitioner's ability to pay. 
Page 6 
Plaintiffs' argument that these figures should be revised by the court by adding back 
depreciation is without support. (Original emphasis.) Chi-Feng at 536. 
That said, as noted above, and as suggested by the petitioner's accountant, we are persuaded by 
the facts in this case to recognize the excludable amounts of income authorized by section 131 of the IRC, 
since they represent specific sums that were available but excluded from the amounts characterized as the 
petitioner's gross income. 
Further, we will recognize the amounts taken as net operating losses shown on the tax returns. If deductible 
expenses for a tax year exceed a business' gross income, certain businesses may deduct the loss from their 
income in another year or years. The loss claime 
 er than the year in which it was incurred is 
called a net operating loss, and as suggested by 
 should not be considered as affecting the 
operations of the current year's tax return. Taxable income before a net operating loss will be considered in 
order to determine whether a petitioner had sufficient incornc in the year of filing to pay the proffered wage. 
Tn this case, by considering the sole proprietor's adjusted gross income without the net operating loss 
carryover figure and without the excludable income amounts and taking into consideration the individual 
household expenses, the sole proprietor's revised adjusted gross income for 1997-2002 years are: 
The amounts for 1998, 1999, and 2000 exceed the proffered wage of $17,700.80 and thus demonstrate the 
ability to pay the wage offer for those years, however amounts shown for 1997,2001, and 2002 do not reflect 
an amount equal to or more than the proffered salary and do not establish the petitioner's ability to pay the 
salary for those years. Moreover, the petitioner failed to provide other acceptable evidence for 2003, such as 
an audited financial statement, that would reflect sufficient reliable data to determine the petitioner's financial 
position in that year. Payment of $7,636.39 to the beneficiary as wages does not demonstrate the petitioner's 
ability to pay the proffered wage, as it is $10,064.41 less than the certified salary shown on the labor 
certification. 
The regulation at 8 C.F.R. 6 204,5(g)(2) requires that a petitioner establish its continuing ability to pay a 
proffered salary beginning at the priority date. In the instant case, upon review of the evidence submitted to 
the underlying record and the evidence and argument provided on appeal, it cannot be concluded that that this 
petitioner demonstrated its continuing financial ability to pay the certified wage. 
The burden of proof in these proceedings rests solely with the petitioner. Section 291 of the Act, 8 U.S.C. 
6 1361. The petitioner has not met that burden. 
ORDER: The appeal is dismissed.