Chen C. and Victoria R. Wang, et al. - Page 8

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          turn.  Companies that were able to sell land, like EIC, did so by           
          developing superior marketing techniques or by utilizing connec-            
          tions with overseas buyers.                                                 
          Accounting Methods                                                          
               EIC keeps its books and records on the accrual basis for the           
          purpose of preparing its financial statements.  For tax purposes,           
          during the years in issue, EIC and petitioner elected to use the            
          installment method for reporting income in their tax returns.               
               This is the second instance where petitioner has been                  
          involved in litigation before the Tax Court.  Previously,                   
          respondent issued petitioner and Mrs. Wang notices of deficiency            
          for their 1979 and 1980 Federal income tax returns.  The most               
          significant portion of the deficiencies for the 2 years related             
          to the income and expenses respondent determined in connection              
          with the Wangs' land sales activities.  Petitioner and Mrs. Wang            
          presented these issues to this Court in a trial that was held on            
          November 30, 1989, and December 1, 1989.  However, no opinion was           
          issued because all of the issues were resolved by the parties               
          after the trial.  The parties executed a closing agreement on               
          final determination covering specific matters for the 1979 tax              
          year (the 1979 closing agreement).4  A decision was entered                 

               4No closing agreement was executed for the 1980 tax year.              
          The following constitutes the closing agreement for 1979:                   
               WHEREAS, taxpayers' 1979 income tax return, Docket No.                 
                                                             (continued...)           




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