Toyota Town, Inc. - Page 12





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          so that payments for insurance of the warranty risk should be               
          deemed to have occurred on the first day of the taxable year for            
          all such payments, regardless of when the payments were actually            
          made.                                                                       
                                     Discussion                                       
          I. Matters Properly Raised                                                  
               As a preliminary matter, we must first decide which issues             
          have been properly raised in these cases.  In addition to the               
          proper period for amortizing insurance expense, which was                   
          challenged in respondent’s determination and was the basis on               
          which petitioners assigned error to that determination in their             
          petitions, petitioners now argue, for the first time on brief,              
          that the EWA proceeds that were remitted to Western General are             
          not income to petitioners, on the basis of the “claim of right”             
          doctrine and income attribution principles.  Should petitioners             
          prevail with respect to these contentions, they maintain that               
          they are entitled to refunds for overpayments in the years at               
          issue.  Respondent objects to our consideration of petitioners’             
          claims that the amounts paid to Western General are not income to           
          them, on the grounds that respondent did not receive “fair                  
          warning” of petitioners’ intention to raise this issue.                     
               We believe the inclusion of the amounts paid to Western                
          General in petitioners’ income is not an issue properly before us           
          for two reasons.  First, petitioners fully conceded this issue              





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