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Respondent's Amended Answer
On November 12, 1997, respondent filed an Amended Answer
requesting that this Court redetermine petitioner's deficiency in
Federal corporate income tax for the 1989 tax year to be $4,537,
plus an increased deficiency pursuant to section 6214(a) in the
amount of $56,839. Respondent apparently based the increased
deficiency contained in the Amended Answer on the Court of
Appeals’ decision that the income petitioner received is measured
by the value of the sewer line which was completed in 1989.
We do not agree with respondent on this issue. Though the
sewer line was completed in 1989, we do not read the Court of
Appeals' decision as mandating that petitioner include in income
for 1989 all of any contribution in aid of construction income
received in connection with the sewer line. Petitioner included
in its income for 1988 the $164,375 disbursed from escrow in 1988
and used in that year for construction of the sewer line. We are
not persuaded that the accession to value realized during 1989
would be greater than $36,625, a sum commensurate with the amount
disbursed from escrow in 1989 to complete construction of the
sewer line. Therefore the inclusion in petitioner's income for
1989 should be limited to $36,625.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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