30
install, or manufacture property. Eagle did none of those
things.
Before the Secretary promulgated section 1.451-5, Income Tax
Regs., accrual basis taxpayers had to defer the deduction of
inventoriable costs until they sold the goods. As discussed
above, Eagle had no inventory. Eagle's situation is not like the
categories of businesses eligible under section 1.451-5, Income
Tax Regs., which do have inventoriable costs. 1 Alkire, Tax
Accounting, par. 4.02[2], at 4-35 n.86 (1996).
We conclude that Eagle does not qualify under section 1.451-
5(a)(1)(ii), Income Tax Regs., because it did not build,
construct, install, or manufacture the house kits.
5. Reporting of Deposits--Conclusion
We hold that Eagle may not defer reporting of customer
deposits under section 1.451-5, Income Tax Regs.9
D. Whether the Notice of Deficiency Complies With Section 7522
Petitioner contends that the notice of deficiency in this
case did not describe the basis for the amounts of tax due as
required by section 7522(a) and that, as a sanction, respondent
should bear the burden of proving that Eagle may not defer
9 Respondent contends that Eagle may not use sec. 1.451-5,
Income Tax Regs., because (a) the purchase agreements were not
for the sale of goods in a future taxable year as required by
sec. 1.451-5(a)(1), Income Tax Regs., and (b) Eagle did not
attach an information schedule to its returns as required by sec.
1.451-5(d), Income Tax Regs. In light of our conclusion in par.
II-C, we need not decide those issues.
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