- 2 -
EJKC, Inc. (EJKC), an S corporation of which petitioner Edward G.
Smith is the sole shareholder, based on respondent’s
determination that EJKC is required to account for inventories
and use the accrual method of accounting.1 After a concession by
petitioners, the issues for decision are: (1) Whether EJKC’s
contracts to purchase and install flooring materials constitute
sales of “merchandise”; and (2) whether respondent abused his
discretion in determining that EJKC’s use of the cash method of
accounting does not clearly reflect its income.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and attached exhibits are incorporated
herein by this reference. At the time the petition was filed,
petitioners resided in Moreno Valley, California.
Petitioner has 25 years’ experience installing flooring
materials such as carpeting, vinyl and ceramic tile, and hardwood
flooring (flooring materials). In 1988, petitioner started his
own flooring installation business. In 1990, petitioner decided
to operate the business as an S corporation and filed articles of
incorporation for EJKC with the California secretary of state.
EJKC conducts business under the fictitious business name of
Smith Floors & Installations (Smith Floors).
1 References to petitioner in the singular are to
petitioner Edward G. Smith.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011