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September 30. Petitioner's fiscal year ended on September 30 in
1986 and 1987. In 1987, petitioner changed its fiscal year to
end on December 31.
Petitioner had an initial capital investment of $65,579 in
1960 and had total assets of $4,183,222 on September 30, 1987.
Petitioner made a profit every year from 1960 to the year in
issue. Petitioner had more jobs under contract in the year in
issue than in previous years. The number of petitioner's
employees increased greatly from 1984 to 1990.
Petitioner's financial situation in fiscal years 1986 and
1987 was as follows:
FY 1986 FY 1987
Total sales $6,666,643 $8,621,838
Gross profit 2,746,670 3,560,057
Ordinary income
before taxes 803,997 893,236
Beginning total assets 3,407,735 3,761,574
Ending total assets 3,761,574 4,183,222
Beginning total equity 1,822,375 2,020,646
Ending total equity 2,020,646 3,391,012
Beginning total capital stock
and paid-in stock or surplus
less paid treasury stock 50,446 50,446
Ending total capital stock
and paid-in stock or surplus
less cost of treasury stock 50,446 50,446
Beginning accumulated
adjustments account 636,158 824,587
Ending accumulated
adjustments account 824,587 2,190,307
Beginning retained earnings 1,135,771 1,135,771
Ending retained earnings 1,135,771 1,135,591
Petitioner's success in the year in issue resulted in part
from an increase in housing construction in southern California.
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