Choate Construction Co. - Page 2

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            compensation for Choate in 1992, as petitioner contends;                                     
            $265,550, as respondent contends; or some other amount.  We hold                             
            that petitioner may deduct $1,010,000.                                                       
                  Section references are to the Internal Revenue Code as in                              
            effect for the relevant periods.  Rule references are to the Tax                             
            Court Rules of Practice and Procedure.                                                       
                                          FINDINGS OF FACT                                               
                  Some of the facts have been stipulated and are so found.                               
            A.    Petitioner                                                                             
                  Petitioner's principal place of business was in Marietta,                              
            Georgia, when it filed the petition in this case.                                            
                  Petitioner is a construction company that specializes in                               
            building medical facilities (e.g., operating rooms), biomedical                              
            and "clean rooms" for laboratories, highly sophisticated                                     
            industrial and robotics facilities, and plants that manufacture                              
            glass.  Businesses use "clean rooms" to manufacture computer                                 
            chips and pharmaceuticals and for activities that require a                                  
            sterile environment of up to 100 times cleaner than a hospital                               
            operating room.                                                                              
                  Petitioner's 1992 tax year started on July 1, 1991, and                                
            ended on June 30, 1992.  Petitioner became an S corporation on                               
            July 1, 1993.                                                                                









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