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receipts and disbursements method (cash method) to the accrual
method.1
FINDINGS OF FACT
The parties submitted this case fully stipulated pursuant to
Rule 122.2 The stipulation of facts and the attached exhibits
are incorporated herein by reference. At the time the petition
was filed, petitioner’s principal place of business was in
Fremont, California.
Petitioner, a California corporation, acquires and
transports sand and gravel for its customers, various contractors
and developers operating in Northern and Central California.3
Petitioner’s customers use the sand and gravel to construct
foundations for streets, houses, and buildings (construction
projects). Most of petitioner’s customers depend on petitioner
to both acquire and transport the sand and gravel from storage
sites to the customers’ construction sites. Some of petitioner’s
customers own or acquire the sand and gravel necessary to
complete their construction projects without petitioner’s
1 In the notice of deficiency, respondent reduced
petitioner’s depreciation, truck, and advertising & promotion
deductions by $28,027, which petitioner does not contest in its
petition.
2 All section references are to the Internal Revenue Code
in effect for the year in issue, and all Rule references are to
the Tax Court Rules of Practice and Procedure.
3 The phrase “sand and gravel” refers to both “sand and
gravel” and “sand or gravel”.
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Last modified: May 25, 2011