Neal T. Baker Enterprises, Inc. - Page 45

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          property from the work-in-progress account into the unimproved              
          land and vacant lot account.                                                
               In regard to investment properties, petitioner listed the              
          properties (such as the Fontana drive-in, the Fontana coffee                
          shop, the Kendall drive-in, and the Banning drive-in) under the             
          land account no. 1210, under the building account no. 1220, or              
          under the undeveloped or vacant land account.  Some investment              
          properties were listed under the work-in-progress accounts                  
          temporarily.  Later (after completion of the buildings, though              
          this is not entirely clear), the properties were moved to land              
          accounts, building accounts, or undeveloped land accounts.                  
               Presented only with the accounting records and Mr. Baker's             
          statements, we are not persuaded that Mr. Baker's conclusions               
          that petitioner's accountants misclassified properties on its               
          financial records are accurate.                                             
               As with its other subdivision properties, petitioner listed            
          the Exchange Property in the work-in-progress account from 1983             
          to 1989.  Further, petitioner never moved the Exchange Property             
          out of the work-in-progress account (even though petitioner                 
          alleges it decided in 1983, or later in 1987-88 after completion            
          of the 14 lots, not to subdivide the Exchange Property).  This              
          treatment reflects petitioner's intent to keep the inactive phase           
          of the 48 lots in the Exchange Property in the work-in-progress             
          account until development of the houses.                                    





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