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incurred but were instead carried as inventory costs.
In 1986 construction of Phase I was completed. Certificates
of occupancy were obtained, and certificates of ownership were
issued to all customers who had paid in full. Howard and Alice
Berger reported as income for 1986 all deposits and installment
payments previously received for this phase. The cost of
construction of Phase I was allocated to the total number of
crypts, and the allocated cost of unsold crypts was deducted
ratably as "cost of sales" as Woodbine issued certificates of
ownership to subsequent crypt purchasers at or after completion
of construction of the mausoleum.
In June 1986, during a trip to Scotland, Howard Berger
became ill with a heart condition, and he and Alice Berger
separated. When Howard Berger returned from Scotland, he did not
move back to the family home in West Long Branch, New Jersey, but
moved instead to Waterboro, Maine. He never resumed day-to-day
management or operation of Woodbine.
During Howard Berger's absence, Gregg Kunkowski acted as
manager of Woodbine. After it became clear that Howard Berger
was not going to return to work, Gregg Kunkowski proposed a
contract setting forth the terms for his continuing employment in
the Woodbine business. He presented his proposal to Dr. Florence
F. Forgotson, Alice Berger's attorney, who drafted an agreement.
On December 1, 1986, Howard Berger and Alice Berger (as
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