- 7 - to its assets reported on line 6 and its liabilities reported on line 18. On its 1993 Schedule M-1, Reconciliation of Income (Loss) per Books With Income (Loss) per Return, AJCS reported a loss of $37,706, which represents the combined income for AJCS and the four affiliates. Respondent determined that $2,261,555 of the $2,808,034 deducted on AJCS’s 1993 tax return was expended for completing the contracts that had been transferred to the four affiliate corporations. Workmen’s Compensation Expenses In 1993, AJCS had transferred its contracts to the four affiliates and, as a result, had no employees performing concrete forming work. AJCS, however, deducted $135,194 as insurance on line 19 of its 1993 return. AJCS accrued $269,815 as a workmen’s compensation insurance liability on its 1993 return. In computing its 1993 taxable income, AJCS reversed the workmen’s compensation accrual. AJCS made payments of approximately $275,000 to various insurance companies. West and Georgia for their years ended September 30, 1993 and 1994, and Central for its years ended June 30, 1993 and 1994, did not claim a workmen’s compensation or insurance expense on line 26 of the corporate Federal tax returns. West reported a relatively large amount of cost of goods sold, but no breakdown was provided to reflect whetherPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011