Epco, Inc. and Subsidiaries - Page 3




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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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