11
For its year ending January 2, 1993, Eagle included in
income (i) the purchase price (including deposits) of houses
delivered in 1992, and (ii) all unapplied deposits on hand at the
end of 1992.
For its 1990 tax year, Eagle reported $275,651 of deposits
in income and deferred reporting $1,505,102 of deposits. For its
1991 tax year, Eagle reported $304,389 of deposits in income and
deferred reporting $1,503,403 of deposits. For its 1992 tax
year, Eagle reported $1,130,830 of deposits in income and
deferred reporting $1,517,037 of deposits.
Eagle prepared financial statements for its tax year ending
July 28, 1990, and its 1991 and 1992 tax years. Eagle prepared
no financial statement for its 1990 tax year.
6. Eagle's Income Tax Returns
Eagle attached a schedule to its 1990, 1991, and 1992
returns on which it reported forfeited deposits5 as income.
Eagle reported as a liability the amount of its customer deposits
at the beginning and end of the year. Eagle reported on each
return that it used the accrual method of accounting. Eagle also
5 Eagle treated a deposit as forfeited if it did not receive
the remainder of the purchase price within 60 days after it
received the deposit and the customer paid no back; or, if the
customer paid a back, 15 days before the house kit was ready to
be shipped and it projected that the contract to which the
deposit related would not close.
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