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either the fiscal year ending January 31, 1989, or the fiscal
year ending January 31, 1990.
Petitioner reported taxable income in the amount of $114,717
(without regard to any NOL deduction) on its income tax return
(Form 1120) for the fiscal year ending January 31, 1989.
Petitioner reported a loss in the amount of $17,776 on its income
tax return (Form 1120) for the fiscal year ending January 31,
1990.
Materials that petitioner ordered for specific jobs were
either delivered to petitioner's premises or "drop-shipped" to
the job site, where the materials were stored in petitioner's
containers. Most of petitioner's materials were ordered FOB-POS;
i.e., free on board--point of shipment. Petitioner retained
title to materials purchased for a job until the main contractor
or owner of the property approved petitioner's work.
In some instances, petitioner was able to purchase materials
only in lot sizes larger than those needed for a particular job.
Materials that petitioner purchased for a particular job that
were not used in the project were retained for future jobs. Any
excess materials remaining at the end of a job either were
collected and sold as scrap by petitioner's employees, who
retained the proceeds, or were removed to petitioner's warehouse.
Petitioner accounted for the direct and indirect costs
associated with work in progress as costs in excess of billings.
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