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(1) Whether partially refundable entry fees paid by residents of
the apartment and lodge units are includable in income in the
year of receipt as advance payments or prepaid rent or are
deposits to be reported ratably in accordance with the accrual of
nonrefundable or nonforfeitable portions; (2) whether the
purchase prices paid by cluster home or condominium purchasers
are sales receipts3 or are loans or financing arrangements; and
(3) whether petitioner Highland Farms, Inc. is liable for the
addition to tax under section 6661.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits attached thereto are
incorporated herein by this reference.
Highland Farms, Inc. (petitioner), is a corporation duly
organized and existing under the laws of the State of North
Carolina. Petitioner's principal place of business was located
in Black Mountain, North Carolina, at the time it filed the
petition in this case. Petitioner is the parent corporation of
its wholly owned subsidiary, Highland Farms Associates, Inc.
(...continued)
is, the unrecognized portions of the cluster home or condominium
receipts equivalent to the repurchase liabilities. This
concession is consistent with respondent's treating the cluster
home or condominium transactions as sales. In the notice of
deficiency, respondent was, in effect, including both the gross
amount of the sales receipts and the gain from the sales.
3 The resolution of this issue will determine whether
petitioner Highland Farms, Inc. is allowed depreciation for the
cluster homes and condominiums.
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