Epco, Inc. and Subsidiaries - Page 5

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                  and, therefore, the projected income stream from the                                     
                  expansion of sewage capacity is irrelevant.  The fact that                               
                  Imperial used the cash to construct the main-line extension                              
                  does not make the contribution equivalent to the asset                                   
                  constructed.  We note that petitioner's reliance on the                                  
                  Staff of Joint Comm. on Taxation, General Explanation of the                             
                  Tax Reform Act of 1986 (J. Comm. Print 1987), relating to                                
                  section 118, is misplaced.  [Id.].                                                       
                  In its motions to vacate and for reconsideration, petitioner                             
            argues that the findings with respect to its alternative argument                              
            are factually incorrect in that petitioner did not receive cash,                               
            but, rather, received a sewer line.  Petitioner also argues that                               
            because its cost of the sewer line extension was greater than the                              
            amount of contributions by McArthy, it realized no income on the                               
            exchange.  We shall grant petitioner's Motion for Reconsideration                              
            and reexamine this argument.                                                                   
                  Petitioner argues that the funds from the escrow account                                 
            were never paid to petitioner, but, instead, were disbursed under                              
            the joint signatures of Fribis, as president of Imperial, and                                  
            McArthy.  Petitioner states that the escrow agreement prevented                                
            it from receiving cash.  Based on a reexamination of the record,                               
            we agree that petitioner did not receive "cash" from the escrow                                
            account in the sense of a disbursement payable to petitioner.                                  
            However, in light of the fact that the disbursements were only                                 
            made under the signatures of Fribis and McArthy to pay entities                                
            to which Imperial was contractually bound, and the fact that                                   
            Imperial is now the owner of the pipeline, we conclude that the                                
            reasoning in Epco, Inc. & Subs. v. Commissioner, supra, is                                     

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