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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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