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under the taxpayer's method of accounting for tax
purposes if such method results in including gross
receipts no later than the time such payments are
included in gross receipts for purposes of all reports
to third parties." Instead the deposits must be
included in income under the general rule - when
actually received.
Finally, 1.451-5(d) requires that if a taxpayer
accounts for advance payments under (b)(1)(ii), he must
attach to his income tax return for each year an annual
information schedule concerning advance payments. As
already argued, the taxpayer fails to satisfy the
definition for advance payments under this section and,
further, he failed to attach a statement as required by
law.
In a chart on page 6 of the 30-day letter, respondent's
agent said that the following adjustments should be made to
Eagle's customer deposits:
(a) Gross Receipts -- Deferred Income
9012 9112
Per return $1419282 $4147691
Per audit 2934384 4145992
Adjustment $15051021 $ (1699)
1 The correct adjustment for 1990 is $1,515,102. Respondent does not
explain this discrepancy.
Respondent's agent did not provide the 30-day letter to
petitioner or to his representative during 1993 or 1994.
D. Notice of Deficiency
Respondent mailed a notice of deficiency to petitioner on
September 23, 1994. In it, respondent determined that petitioner
was liable for deficiencies in income tax of $433,706 for 1990,
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