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confirmed by the Bankruptcy Court on July 19, 1993. As indicated
above, petitioner never received any additional payments from
Clinch River.
Petitioner filed an untimely corporate Federal income tax
return for its taxable year ending February 28, 1989 (the 1989
return). The 1989 return was originally due on May 15, 1989, but
petitioner on that date obtained a filing extension until
November 15, 1989. Respondent, however, did not receive
petitioner's 1989 corporate Federal income tax return until
June 25, 1990.
On the application for automatic extension of time to file
its 1989 return, petitioner reported a tentative tax liability of
$80,000, an estimated tax payment of $20,000, and an estimated
balance due of $60,000. The $60,000 payment that was to
accompany petitioner's extension request was not received by
respondent until May 17, 1989.
Consistent with the above yearend closing adjustments that
were made on petitioner's books and records with regard to
payments due from Clinch River, on petitioner’s 1989 corporate
Federal income tax return, petitioner accrued $4,159,8521 in
income, and petitioner claimed a $600,000 bad debt deduction with
1 $5,136,000 (initially accrued on petitioner's books and
records) less $636,000 (for first contract price adjustment) less
$340,148 (for amount to be paid by Clinch River directly to
suppliers and subcontractors) equals $4,159,852.
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