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OPINION
LARO, Judge: The Camerons and Broadaways (petitioners)
jointly petitioned for redetermination of Federal income tax
deficiencies determined by respondent as follows:
Year Deficiency
Broadaways 1989 $18,705.89
Year Deficiency
Camerons 1989 $45,102.35
1990 6,289.11
After concessions by the parties, we must decide two remaining
questions that will determine the extent to which petitioners
recognized dividend income from a distribution by Cameron
Construction Co. (Company) in 1989:
(1) Whether Company's contemporaneous estimates of the cost
of completing its long-term contracts may be revised
retroactively in computing earnings and profits under the
percentage of completion method. We hold that they may not.
(2) Whether Company's earnings and profits may be adjusted
for taxable years to which its subchapter S election applied. We
hold that they may not.
Stipulations
This case was submitted on the basis of a fully stipulated
record. The stipulations of fact and attached exhibits are
incorporated herein by this reference.
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