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received cash in the transaction and did not receive a sewer
line.
In a supplemental memorandum opinion, we considered both
petitioner's Motion for Reconsideration under Rule 161 and Motion
to Vacate Decision under Rule 162 and held that, while petitioner
did not receive "cash" per se from the escrow account, petitioner
received the benefit of the escrow funds in the same manner as if
the funds had been deposited directly into petitioner's own
account and were used to pay contractors to whom petitioner was
directly liable. See EPCO, Inc. & Subs. v. Commissioner, T.C.
Memo. 1995-499 (EPCO II).
In EPCO, Inc. & Subs. v. Commissioner, 104 F.3d 170 (8th
Cir. 1997), the U.S. Court of Appeals for the Eighth Circuit
affirmed in part, vacated in part, and remanded our decision in
EPCO I. The Court of Appeals affirmed our finding that
petitioner received a contribution in aid of construction under
section 118(b), which was includable in petitioner's gross income
for 1989. However, the Court of Appeals held that whatever
contribution in aid of construction income petitioner received in
1989 was based on the value of a completed sewer line and not on
the disbursal of escrow funds. The case was remanded to the Tax
Court to determine the fair market value of the completed sewer
line.
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