Philip L. Firetag - Page 2




                                        - 2 -                                          
          After concessions, we must decide the following:  (1) Whether                
          petitioner is required to recognize as income in the years in                
          issue amounts deposited into certain accounts as described below.            
          We hold that he is.  (2) Whether recognition of the deposited                
          amounts in the year of deposit constitutes a change in accounting            
          method, requiring an adjustment to petitioner’s income under                 
          section 481.1  We hold a section 481 adjustment is required.                 
                                   FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.  We            
          incorporate by this reference the stipulation of facts, the                  
          supplemental stipulation of facts, and the attached exhibits.  At            
          the time of filing the petition, petitioner resided in                       
          Charleston, South Carolina.                                                  
               Petitioner was a licensed professional bail bondsman, and               
          before trial he had been in the bonding business for more than 20            
          years.  Petitioner conducted his bonding business as a sole                  
          proprietorship.  The proprietorship income was reported using the            
          accrual method of accounting.  Petitioner wrote bonds for                    
          criminal defendants to ensure their future appearance in court.              
          The bonds varied in amount and were set by the court.  The                   
          defendants, or someone on their behalf (collectively,                        



               1 Unless otherwise noted, all section references are to the             
          Internal Revenue Code in effect for the years in issue, and all              
          Rule references are to the Tax Court Rules of Practice and                   
          Procedure.                                                                   





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