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tioner and EIC must report income based on the accrual method of
accounting.
Since we have concluded that petitioner and EIC must report
income on the accrual method, there are a number of derivative
computational issues that we must address. First, in the second
stipulation of settled issues, the parties indicate that they
have not reached an agreement as to the proper amount of income
EIC must report in 1989 under the accrual method. Respondent
determined in the notice of deficiency dated April 1, 1994, that
the income is $19,584,214, while EIC contends it is $18,850,859.
After a concession of $100,000, respondent now contends that the
income should be $19,484,214. Petitioner has failed to
adequately address this issue on brief7 or otherwise. As a
7In petitioners' reply brief, with respect to the different
calculations of accrual income, petitioner states "We maintain
that the parties must abide by the stipulations they previously
executed." The second stipulation of settled issues presents the
parties' computation of accrual income for EIC as follows:
Income To Be Reported by Petitioner EIC
Cost Recovery Installment
Year Method Method Accrual Method
1989 $4,968,292 $10,093,843 To Be Determined
1990 3,230,695 5,506,844 $9,990,901
1991 3,253,218 3,072,503 2,801,850
1992 2,213,590 1,978,872 670,700
In the stipulation, the parties indicate that the proper amount
of accrual income for 1989 will be presented to the Court for
(continued...)
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