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1995. The facts and holding of that opinion are incorporated
herein by this reference.1
Brooks McArthy (McArthy) sought to develop a trailer park on
land he owned to be called Brookshire Village Mobile Home Park
(Brookshire). McArthy utilized the resources of Eugene Fribis
(Fribis), an engineer consultant and owner of Epco, Inc.
(petitioner), the common parent of an affiliated group that
includes House Springs Sewer Co. (House Springs) and Imperial
Utility Corp. (Imperial). In particular, Fribis advised McArthy
regarding the sewer system Brookshire would require. McArthy
later opted for an underground sewage pipe extension to County
Club Manor (Manor), a sewage treatment facility operated by
Imperial. This method required the construction of pipes and
expansion of Manor to handle the additional sewage. The cost of
this method totaled $540,000. Each mobile home was required to
pay a $400 "contribution in aid of construction fee" and a
monthly service charge of $18 for sewage treatment.2
Imperial contracted with McArthy to build a sewer system for
Brookshire. Imperial agreed to build an underground wastewater
collection pipe extending from Manor to Brookshire. McArthy
agreed to pay Imperial $200,000 in "tap-on fees" ("contributions
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended. All Rule references are to
the Tax Court Rules of Practice and Procedure.
2 The term "tap-on fee" is commonly used interchangeably
with the term "contribution in aid of construction".
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Last modified: May 25, 2011