- -8
Year ending July 31 Taxable income
1987 $193,594
1988 109,261
1989 134,120
1990 823,886
After its fiscal year 1990, petitioner became an S
corporation, and thereafter for each year filed a Form 1120S,
U.S. Income Tax Return for an S Corporation. On its Federal
income tax returns for its taxable years 1990 (short year of
August 1, 1990 through December 31, 1990), 1991, and 1992,
petitioner reported gross receipts and ordinary income as
follows:
Year Gross receipts Ordinary income
1990 $7,643,457 $61,223
1991 16,664,152 525,687
1992 11,493,635 173,169
Petitioner paid no dividends from the date of its inception
to the time of the trial in this case. Petitioner's return on
equity for its fiscal years 1988 through 1990 and calendar years
1990 through 1992, computed by using as net income after taxes
amounts computed from petitioner's Federal income tax returns and
dividing that amount by shareholder equity at the beginning of
the year, is as follows:
Tax year ended Formula Return on equity
July 31, 1988 $83,399
$210,654 40%
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