- 2 -
9817-96 12/31/92 233,413 46,683
12/31/93 111,093 22,219
All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
After concessions,1 the issues for decision are (1) whether
respondent determined that the method of accounting used by
Addison Engineering, Inc. (AEI), did not clearly reflect income,
and (2) whether AEI must change from the cash method to the
accrual method of accounting for its tax years ending on October
31, 1992 and 1993.2
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulations of facts, the stipulation of settled issues, and
the attached exhibits are incorporated herein by this reference.
At the time petitioners filed their petitions, AEI and Addison
Distribution, Inc. (Distribution), each had their principal
places of business in San Jose, California, and Win H. Emert (Mr.
Emert) resided in San Carlos, California.
1 Respondent concedes that petitioners are not liable for
the accuracy-related penalties.
2 The parties filed a stipulation of settled issues which
resolved all other issues. Our decision regarding these issues
affects the flowthrough tax consequences to petitioner Win H.
Emert, AEI's sole shareholder.
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