Pelaez and Sons, Inc. - Page 3




                                        - 3 -                                         
          respondent is precluded from making any adjustment concerning the           
          corporation’s 1991 taxable year due to the expiration of the                
          limitation period.                                                          
                                  FINDINGS OF FACT2                                   
               Pelaez and Sons, Inc., a Florida corporation, was                      
          incorporated during 1955 and has continuously had its principal             
          place of business and engaged in commercial farming, through the            
          time of trial, in the State of Florida.  Since 1989, S                      
          corporation status has been elected for Federal tax purposes, and           
          the corporation was a cash basis taxpayer for the years under               
          consideration.                                                              
               Beginning in 1955, the corporation engaged in commercial               
          cattle ranching and during the early 1960’s began raising sugar             
          cane.  In the late 1980’s the corporation entered into citrus               
          growing operations to increase profits and minimize risk by means           
          of diversification.  After successfully accelerating the                    
          reproduction time in its cattle-raising activity, the                       
          corporation, in a favorable citrus market, attempted to                     
          accelerate the production of citrus crops.  The land to be used             
          for the citrus grove had been used for cattle grazing, which made           
          it most suitable for citrus production.                                     




               2 The parties’ stipulation of facts and the attached                   
          exhibits are incorporated by this reference.                                





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