Epco, Inc. and Subsidiaries - Page 2




                                        - 2 -                                         

          affg. in part, vacating in part, and remanding T.C. Memo. 1995-             
          249 and T.C. Memo. 1995-499.                                                
               The issue for decision is the proper amount of contribution            
          in aid of construction income includable in petitioner's 1989               
          gross income.  In order to decide this issue, we are required to            
          determine the fair market value of a sewer line petitioner                  
          constructed using amounts contributed to petitioner as a                    
          contribution in aid of construction.                                        
               Petitioner, using the capitalization of income method of               
          valuation, contends that the sewer line has a fair market value             
          of $80,000 and that petitioner recognized no contribution in aid            
          of construction income in 1989.  Respondent, using the cost                 
          method of valuation, contends that the sewer line has a fair                
          market value of $540,000 and that petitioner recognized $200,000            
          in contribution in aid of construction income in 1989.                      
               In EPCO, Inc. & Subs. v. Commissioner, T.C. Memo. 1995-249             
          (EPCO I), this Court held that escrow amounts disbursed in the              
          construction of a sewer line constituted a contribution in aid of           
          construction under section 118(b), and, as such, were includable            
          in petitioner's income.1  We further held that petitioner                   




               1    Unless otherwise indicated, all section references are            
          to the Internal Revenue Code in effect for the year in issue, and           
          all Rule references are to the Tax Court Rules of Practice and              
          Procedure.                                                                  




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011