- 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