sustained EB-3 Case: Jewelry

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PUBLIC COPY 
U.S. Department of Homeland Security 
20 Mass. Ave., N.W., Rrn. A3042 
Washington, DC 20529 
U.S. Citizenship 
and Immigration 
DL 
FILE: SRC-04-015-52461 Office: TEXAS SERVICE CENTER Date: 
 g 2006 
IN RE: Petitioner: 
Beneficiary: 
PETITION: 
 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. 5 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. 
~dbert P. Wiemann, Chief 
Administrative Appeals Office 
SRC-04-015-5246 1 
Page 2 
DISCUSSION: The preference visa petition was denied by the Director, Texas Service Center, and is now 
before the Administrative Appeals Office (AAO) on appeal. The appeal will be sustained. 
The petitioner is a jewelry retail firm. It seeks to employ the beneficiary permanently in the United States as 
a mold maker IUdesigner jewelry. 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 it was a successor-in-interest and denied the petition 
accordingly. 
The record shows that the appeal is properly filed, timely and makes a specific allegation of error in law or fact. 
The procedural history in this case is documented by the record and incorporated into this decision. Further 
elaboration of the procedural history will be made only as necessary. 
As set forth in the director's December 3, 2004 denial, the issue in this case is whether or not the petitioner is a 
successor-in-interest to the original entity named in the labor certification. If evidence shows that the petitioner is 
a successor-in-interest, then a second issue in this case is whether or not the petitioner has the ability to pay the 
proffered wage as of the priority date and continuing until the beneficiary obtains lawful permanent residence. 
Section 203(b)(3)(A)(i) of the Immigration and Nationality Act (the Act), 8 U.S.C. 3 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 or seasonal nature, for which qualified workers are not available in the United 
States. Section 203(b)(3)(A)(ii) of the Act provides for the granting of preference classification to qualified 
immigrants who hold baccalaureate degrees and who are members of the professions. 
The regulation at 8 C.F.R. 3 204.5(g)(2) states: 
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 a case 
where the prospective United States employer employs 100 or more workers, the director 
may accept a statement from a financial officer of the organization which establishes the 
prospective employer's ability to pay the proffered wage. In appropriate cases, additional 
evidence, such as profitlloss statements, bank account records, or personnel records, may be 
submitted by the petitioner or requested by [Citizenship and Immigration Services (CIS)]. 
The petitioner must demonstrate the continuing ability to pay the proffered wage beginning on the petition's 
priority date, which is the date the Form ETA 750 was accepted for processing by any office within the 
employment system of the Department of Labor. See 8 C.F.R. 3 204.5(d). The priority date in the instant 
petition is April 30,2001. The proffered wage as stated on the Form ETA 750 is $35,318.00 per year. 
The AAO takes a de novo look at issues raised in the denial of this petition. See Dor v. INS, 891 F.2d 997, 1002 
n. 9 (2d Cir. 1989)(noting that the AAO reviews appeals on a de novo basis). The AAO considers all pertinent 
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evidence in the record, including new evidence properly submitted upon appeal1. Relevant evidence submitted on 
appeal includes a letter from the petitioner's certified public accountant, a copy of relevant parts of Section 368(a) 
of the Internal Revenue Code, copies of consolidated financial statements, and copies of financial statements for 
the original entity. Other relevant evidence in the record includes a copy of the petitioner's reorganization 
statement from the petitioner's 2002 tax return, copies of the petitioner's financial statements, a copy of the 
petitioner's bank slip, a copy of the petitioner's business license, copies of the petitioner's Form 1120 U.S. 
Corporation Income Tax Returns for 2002 and 2003, a copy of the original entity's Form 1120 U.S. Corporation 
Income Tax Return for 2001, a copy of the original entity's payroll summary for 2001, a copy of the petitioner's 
payroll summary for 2003, and a letter from the petitioner. The record does not contain any other evidence 
relevant to the petitioner's status as a successor-in-interest and the petitioner's ability to pay the proffered wage. 
Counsel states on appeal that documentary evidence shows that the petitioner has acquired all the assets and 
business of the original entity. 
The first issue in this case is whether or not the petitioner is a successor-in-interest to the original entity named in 
the labor certification. The status of successor-in-interest requires documentary evidence that the petitioner has 
assumed all of the rights, duties, obligations and assets of the original employer and continues to operate the 
same type of business as the original employer. In order to maintain the original priority date, a successor-in- 
interest must demonstrate that the predecessor had the ability to pay the proffered wage as of the priority date 
and continuing until the petitioner succeeded the original employer. See Matter of Dial Auto Repair Shop, 
Inc., 19 I&N Dec. 48 1 (Cornrn. 1986). 
The record contains a copy of the petitioner's reorganization statement from the petitioner's 2002 tax return. It 
states: 
A type D reorganization, as defined b S 368 a (1 (d), is a transfer by one corporation (GOLD N 
FASHION, INC. - Taxpayer Number wof its assets to a controlled 
corporation (ARK JEWELERS, INC. - Taxpayer Number 
 followed by a complete 
liquidation of the transferor corporation (GOLD N FASHION, I 
This statement does not show that the petitioner has met all four prongs of the definition of a successor-in-interest 
because it mentions assets, but not rights, duties, or obligations. 
The record contains a letter from the petitioner's certified public accountant dated January 3,2005 stating that "all 
the businesses and assets are transferred to [the petitioner.]" This statement also does not show that the petitioner 
has assumed all of the rights, duties, and obligations, and nothing in the record defines the term "businesses" to 
include rights, duties, and obligations. 
The record contains a copy of the petitioner's compiled balance sheet and statement of income for 2002 and a 
copy of the original entity's balance sheet and statement of income for 2002, and counsel states that "Crown 
Jewelry, Inc. appears on both [the petitioner's and its predecessor's] statements, which concludes that [the 
petitioner] is running jewelry business and owns Crown Jewelry." Those balance sheets and statements of 
income are essentially compiled financial statements. The regulation at 8 C.F.R. 5 204.5(g)(2) makes clear that 
1 
 The submission of additional evidence on appeal is allowed by the instructions to the Form I-290B, which are 
incorporated into the regulations by the regulation at 8 C.F.R. Q 103.2(a)(l). The record in the instant case provides no 
reason to preclude consideration of any of the documents newly submitted on appeal. See Matter of Soriano, 19 I&N 
Dec. 764 (BIA 1988). 
SRC-04-015-5246 1 
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where a petitioner relies on financial statements to demonstrate its ability to pay the proffered wage, those 
financial statements must be audited. An audit is conducted in accordance with generally accepted auditing 
standards to obtain a reasonable assurance that the financial statements of the business are free of material 
misstatements. The unaudited financial statements that counsel submitted with the petition are not persuasive 
evidence. The accountant's letter that accompanied those financial statements and notes on the bottom of 
each statement make clear that they were produced pursuant to a compilation rather than an audit. As the 
accountant's letter also makes clear, financial statements produced pursuant to a compilation are the 
representations of management compiled into standard form. The unsupported representations of 
management are not reliable evidence and are insufficient to demonstrate that the petitioner is a successor-in- 
interest. In addition, those financial statements do not show that the petitioner has assumed all of the rights, 
duties, obligations and assets of the original entity. 
The record likewise includes a copy of the petitioner's consolidated balance sheet and statement of income for 
2002, a copy of the original entity's payroll summary for 2001, and a copy of the petitioner's payroll summary for 
2003. These are likewise unaudited financial statements and, as stated above, are not persuasive evidence 
showing that the petitioner has assumed all of the rights, duties, obligations and assets of the original entity. 
The record contains a letter from the petitioner dated September 11, 2003 stating that the original entity and the 
petitioner "are sister concerns." The letter is silent on whether the petitioner has assumed all of the rights, duties, 
obligations and assets of the original entity. The letter also fails to define "sister concerns." 
The record contains a copy of the petitioner's bank slip with its name as "ARK JEWELERS INC. DBA CROWN 
JEWELRY," a copy of the petitioner's business license, and copies of the petitioner's and the original entity's tax 
returns showing that both entities have the same shareholders. Counsel states that "[tlhese documents also prove 
[that the petitioner] operates ljlewelry trade and owns Crown Jewelry." Those documents provide information 
about the petitioner, but the fact that the two entities have the same shareholders is insufficient to show that the 
petitioner is a successor-in-interest. In addition, the original entity's tax return for 2002 does not indicate that it 
owned Crown Jewelry. 
The record contains a copy of Section 368(a) of the Internal Revenue Code. According to Section 368(a)(1), 
"reorganization" means: 
(D) a transfer by a corporation of all or a part of its assets to another corporation if immediately after the 
transfer the transferor, or one or more of its shareholders (including persons who were shareholders 
immediately before the transfer), or any combination thereof, is in control of the corporation to which the 
assets are transferred; but only if, in pursuance of the plan, stock or securities of the corporation to which 
the assets are transferred are distributed in a transaction which qualifies under section 354,355, or 356. 
The regulation specifically mentions assets, but not rights, duties, or obligations. In addition, no evidence in the 
record shows that the latter part of the regulation has been satisfied; nothing in the record documents that a 
qualifying transaction took place and nothing in the record defines "section 354, 355, or 356." 
Counsel also states that "[tlhe [Internal Revenue Service (IRS) has accepted the reorganization of [the petitioner] 
to be valid and in cognizance with the law." Nothing in the record shows that the IRS has explicitly accepted the 
reorganization. Going on record without supporting documentary evidence is not sufficient for purposes of 
meeting the burden of proof in these proceedings. Matter of SofJici, 22 I&N Dec. 158, 165 (Comm. 1998) 
(citing Matter of Treasure Craft of California, 14 I&N Dec. 190 (Reg. Comrn. 1972)). 
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Despite the foregoing, the AAO, in certain instances, will consider the totality of circumstances where a case 
presents some unique factors. According to the tax returns, both the petitioner and the original entity have two 
shareholders, each owing 50% of the voting stocks. Thus, the petitioner is a small corporation and may not have 
formal documentation of the transfer. Moreover, the reorganization appears to simply consist of the owners 
rearranging their businesses, thereby making it unlikely that formal paperwork showing the reorganization exists. 
In addition, the case at hand is distinguishable from Matter of Dial. In Matter of Dial, "counsel was instructed on 
appeal to fully explain the manner by which the petitioner took over the business of [its predecessor] and to 
provide the Service with a copy of the contract or agreement between the two entities; however, no response was 
submitted." 19 I&N Dec. 481, 482. The petitioner in this case did submit further evidence in support of its 
original submission of the petitioner's reorganization statement to show that the original entity was reorganized 
and the petitioner is the successor-in-interest. 
Due to these unique factors, the AAO determines that it is unlikely that documentation showing that the petitioner 
has assumed all the rights, duties, obligations and assets of its predecessor exists. Moreover, evidence in the 
record, specifically the petitioner's reorganization statement from the petitioner's 2002 tax return, shows that such 
reorganization did take place. Therefore, the AAO finds that the petitioner is a successor-in-interest. 
The second issue in this case is whether or not the petitioner has the ability to pay the proffered wage as of the 
priority date and continuing until the beneficiary obtains lawful permanent residence. 
The petitioner must establish that its job offer to the beneficiary is a realistic one. Because the filing of an 
ETA 750 labor certification application establishes a priority date for any immigrant petition later based on the 
ETA 750, the petitioner must establish that the job offer was realistic as of the priority date and that the offer 
remained realistic for each year thereafter, until the beneficiary obtains lawful permanent residence. The 
petitioner's ability to pay the proffered wage is an essential element in evaluating whether a job offer is realistic. 
See Matter of Great Wall, 16 I&N Dec. 142 (Acting Reg. Comm. 1977). See also 8 C.F.R. 5 204.5(g)(2). In 
evaluating whether a job offer is realistic, CIS requires the petitioner to demonstrate financial resources sufficient 
to pay the beneficiary's proffered wages, although the totality of the circumstances affecting the petitioning 
business will be considered if the evidence warrants such consideration. See Matter of Sonegawa, 12 I&N Dec. 
612 (Reg. Comm. 1967). 
As stated above, a successor-in-interest must demonstrate that the predecessor had the ability to pay the proffered 
wage as of the priority date and continuing until the petitioner succeeded the original employer. See Matter of 
Dial Auto Repair Shop, Inc., 19 I&N Dec. 481 (Comm. 1986). According to the petitioner's tax returns, it is 
incorporated in September 6, 2002. Thus, the petitioner must show that its predecessor, Gold N Fashion, Inc., 
had the ability to pay the proffered wage as of the priority date and that the petitioner had the ability to pay the 
proffered wage beginning on September 6,2002. 
In determining the petitioner's ability to pay the proffered wage, CIS will first examine whether the petitioner 
employed the beneficiary at the time the priority date was established. If the petitioner establishes by 
documentary evidence that it employed the beneficiary at a salary equal to or greater than the proffered wage, 
this evidence will be considered prima facie proof of the petitioner's ability to pay the proffered wage. In the 
instant case, on the Form ETA 750B, signed by the beneficiary on March 29,2001, the beneficiary did not claim 
to have worked for the petitioner's successor. 
The copy of the original entity's payroll summary for 2001 indicates that the beneficiary was paid $2,500.00 in 
wages from January to December, 2001. However, as stated above, the payroll summary is an unaudited 
financial statement and thus is not persuasive evidence. Moreover, $2,500.00 is well below the proffered wage. 
SRC-04-015-52461 
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As another means of determining the petitioner's ability to pay the proffered wage, CIS will next examine the 
petitioner's net income figure as reflected on the petitioner's federal income tax return for a given year, 
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 COT. v. Sava, 632 F. Supp. 1049, 1054 (S.D.N.Y. 1986) (citing Tongatapu Woodcraft Hawaii, Ltd. v. 
Feldman, 736 F.2d 1305 (9" Cir. 1984)); see also Chi-Feng Chang v. Thornburgh, 719 F. Supp. 532 (N.D. Tex. 
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 (7~ Cir. 1983). In K.C.P. Food Co., Inc., 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. 623 F. Supp. at 1084. The 
court specifically rejected the argument that the Service should have considered income before expenses were 
paid rather than net income. Finally, there is no precedent that would allow the petitioner to "add back to net cash 
the depreciation expense charged for the year." See Elatos Restaurant Colp., 632 F. Supp. at 1054. 
The evidence indicates that the petitioner is a corporation. The record contains a copy of Gold N Fashion, Inc.'s 
Form 1120 U.S. Corporation Income Tax Return for 2001 and copies of the petitioner's Form 1120 U.S. 
Corporation Income Tax Returns for 2002 and 2003. The record before the director closed on October 26,2004 
with the receipt by the director of the petitioner's submissions in response to the RFE. As of that date the 
petitioner's federal tax return for 2004 was not yet due. Therefore the petitioner's tax return for 2003 is the most 
recent return available. 
For a corporation, CIS considers net income to be the figure shown on line 28, taxable income before net 
operating loss deduction and special deductions, of the Form 1120 U.S. Corporation Income Tax Return, or the 
equivalent figure on line 24 of the Form 1120-A U.S. Corporation Short Form Tax Return. The tax returns show 
the amounts for taxable income on line 28 as shown in the table below. 
Tax Wage increase needed Surplus or 
year Net income to pay the proffered wage deficit 
* The full proffered wage, since the record contains no persuasive evidence of 
any wage payments made by the petitioner to the beneficiary in those years. 
The above information is sufficient to establish the petitioner's ability to pay the proffered wage in 2001, 
2002, and 2003. Even though the petitioner is supposed to show that its predecessor had the ability to pay the 
proffered wage up to the date of reorganization, which is September 6, 2002, and the petitioner does not have 
to show its ability to pay the proffered wage until September 6, 2002, the record only contains the petitioner's 
Form 1120 U.S. Corporation Income Tax Return for 2002. Since the petitioner succeeded its predecessor in 
the reorganization and its tax return for 2002 appears to cover the whole year and not just from September 6, 
2002 onward, the AAO determines that the petitioner's tax return will suffice in this instance 
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The record contains numerous copies of the petitioner's reorganization statement from the petitioner's 2002 tax 
return. One of the copies includes information on its backside showing that the petitioner has filed an 1-140 
petition for another employee with the same priority date, and that petition appears to have been approved by the 
director on February 23, 2006. The petitioner must show that it has the ability to pay all the wages as of the 
priority date. 
The petitioner's net income for 2002 and 2003, as shown above, is more than double the beneficiary's proffered 
wage. Even though the AAO lacks information regarding the other employee's proffered wage, the AAO 
assumes that it is equivalent to the beneficiary's proffered wage. The original entity's net income for 2001 is less 
than double the beneficiary's proffered wage. However, the original entity has net current assets of $250,232.00 
for 2001, and this amount is more than 7 times the proffered wage.2 Thus, even though the petitioner filed more 
than one 1-140 petition, the AAO still finds that the petitioner has established its ability to pay the proffered wage 
to the beneficiary as of the priority date of the petition and continuing until the beneficiary obtains lawful 
permanent residence. 
For the reasons discussed above, the assertions of counsel on appeal and the evidence submitted on appeal 
have overcome the decision of the director. 
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 met that burden. 
ORDER: The appeal is sustained. 
Net current assets are a corporate taxpayer's current assets less its current liabilities. Current assets include cash on 
hand, inventories, and receivables expected to be converted to cash within one year. A corporation's current assets are 
shown on Schedule L, lines 1 through 6. Its current liabilities are shown on lines 16 through 18. If a corporation's net 
current assets are equal to or greater than the proffered wage, the petitioner is expected to be able to pay the proffered 
wage out of those net current assets. The net current assets are expected to be converted to cash as the proffered wage 
becomes due. Thus, the difference between current assets and current liabilities is the net current assets figure, which if 
greater than the proffered wage, evidences the petitioner's ability to pay.