2
Penalty
Year Deficiency Sec. 66621
1990 $433,706 $86,741
1991 9,741 1,948
1992 4,354 871
1 Respondent concedes that petitioner is not liable for the accuracy-
related penalty.
Petitioner was the sole shareholder of Eagle's Nest Homes,
Inc. (Eagle), an S corporation which sold panelized houses.
Deposits Issue. Eagle, an accrual method taxpayer,
received customer deposits under written purchase agreements.
The deposits issue for decision is whether, as petitioner
contends, Eagle may defer reporting some of its customer deposits
under section 1.451-5, Income Tax Regs., or under other income
tax accounting rules. We hold that it may not.
Procedural Issues. Respondent's revenue agent prepared a
30-day letter in this case. Respondent's revenue agent included
a chart in the 30-day letter with columns for 1990 and 1991
showing the amount of Eagle's gross receipts reported on the
return and per the audit. Respondent's revenue agent later added
a column for 1992 to the chart. Respondent's counsel gave
petitioner a copy of the modified 30-day letter to include in the
stipulation. Respondent's revenue agent initially testified that
she had not added the third column but later testified that she
had added it.
Respondent concedes that the agent's conduct warrants
imposition of a sanction. Respondent contends that the sanction
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