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At the direction of the Court of Appeals, we now undertake
to determine the fair market value of that sewer line in order to
determine the amount of income, if any, which should be
recognized by petitioner as a contribution in aid of construction
for the 1989 tax year.
FINDINGS OF FACT
The findings of fact are set forth in EPCO I and are
incorporated herein by this reference. The stipulations and
exhibits are also incorporated herein by this reference. For
convenience, we shall only set forth the facts necessary to
clarify the ensuing discussion.
Petitioner is an affiliated group of corporations which
filed a consolidated Federal corporate income tax return for
1989. For the year at issue, EPCO, Inc. (EPCO), a Missouri
corporation, was the common parent of an affiliated group which
included Imperial Utility Corp. (Imperial), a Missouri
corporation 100 percent owned by EPCO. During the year at issue,
Eugene Fribis (Mr. Fribis) and his wife owned all of the stock of
EPCO, and Mr. Fribis served as the president of both EPCO and
Imperial. Imperial engages in the business of sewage collection
and treatment and is regulated by the Missouri Public Service
Commission (PSC).
Sometime in 1986 or 1987, Brooks McArthy (Mr. McArthy), a
real estate developer, planned to develop a trailer park
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