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Echols, who was responsible for field operations, and Mr. Edward
Thorpe, Jr., the son of Mr. and Mrs. Thorpe.
Mr. and Mrs. Thorpe started ETCO as a home-based business.
ETCO procured most of its business through direct solicitation of
housing authorities in various states. In an effort to market
ETCO's services directly to housing authorities, ETCO
participated in trade shows and conventions for which ETCO
incurred travel and entertainment expenses. Mr. Thorpe attended
the trade shows and conventions where he would represent ETCO by
stationing himself at an exhibit booth, which displayed ETCO's
products. Mrs. Thorpe attended a number of conferences with Mr.
Thorpe. While at the trade shows, Mrs. Thorpe occupied the
display booth and talked to people about ETCO's product, met new
or prospective clients, learned more about the market, and
solicited new business. In the fiscal tax years ending June 30,
1990, 1991, and 1992, ETCO incurred and deducted on its U.S.
Corporation Income Tax Returns (Forms 1120) travel and
entertainment expenses of $74,395, $81,237, and $75,749,
respectively.
In 1988, the officers of ETCO began looking for commercial
office space from which to run its business operations. The
officers spent approximately 1 year evaluating the local
commercial real estate market. During that time, the officers
contacted numerous real estate agents and researched real estate
listings in local newspapers.
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