- 9 -
income the $164,375 of disbursements made from the escrow account
during 1988 on its 1988 Federal corporate income tax return.
Petitioner did not include in income the 1989 disbursements from
the escrow account totaling $35,625 on its 1989 Federal corporate
income tax return.
Petitioner included the $164,375 paid to "Price/McClanahan"
in its cost basis of the sewer line (referred to by petitioner as
the "Brookshire Trunk Sewer Line") on the depreciation worksheet
attached to its corporate income tax return and, with regard to
this amount only, claimed depreciation in the amount of $6,164.05
for 1988 and $11,866.27 for the 1989 tax year. Petitioner
claimed a total cost basis in the Brookshire Trunk Sewer Line in
the amount of $373,514.44 on its 1989 consolidated Federal
corporate income tax return3 and claimed total depreciation on
the sewer line in the amounts of $15,279.92 and $30,757.31 for
the 1988 and 1989 tax years, respectively.
OPINION
General Discussion
Gross income generally means all income from whatever source
derived. See sec. 61(a). Section 118(a) provides an exception
to the general rule and states: "In the case of a corporation,
3 There is no explanation in the record as to the
difference between the cost basis of the sewer line as reported
on petitioner's corporate income tax return and the stipulated
cost of $350,000.
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