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For Federal income tax purposes, Towers Construction
elected on June 1, 1983, to be treated as an S corporation as
defined by section 1361(a)(1). Towers Development made its S
corporation election on January 1, 1984.
Issue 1. Gas Rebate Payments
Background
In 1985, West Florida Natural Gas, Inc., of Panama City,
Florida (West Florida Gas), began participating in an energy
conservation program, authorized by the State of Florida, to
encourage the use of natural gas instead of electricity. Under
the program, contractors who installed gas heating and cooling
units were eligible to receive rebates from gas companies.
Beginning in 1985, Towers Construction participated in the
West Florida Gas rebate program. Towers Construction, as the
contractor on the Gulf Highlands project, was entitled to
receive the gas rebate checks from West Florida Gas. In 1985,
Towers Construction received from West Florida Gas six rebate
checks totaling $112,000, and in January 1986, it received two
more rebate checks totaling $22,620. Beginning in May 1986, and
continuing through November 1988, with respect to gas rebates
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Last modified: May 25, 2011