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Respondent determined deficiencies of $9,821, $9,127, and
$6,166 in petitioner’s Federal income taxes for taxable years
1995, 1996, and 1997, respectively. After concessions,1 the sole
issue for decision is whether petitioner is entitled to credits
for Federal tax on fuels pursuant to sections 34 and 6420.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by reference. At the time the petition was
filed in this case, petitioner was a corporation organized in the
State of California. During the years in issue, petitioner’s
principal place of business was Shafter, California. William A.
Duncan (Mr. Duncan), president and sole shareholder of
petitioner, signed the petition and appeared at trial on behalf
of petitioner.
Petitioner is an agricultural chemical application company
that applies pesticides to various farms and orchards in
California. The pesticides are applied by tractor-pulled spray
rigs. Petitioner enters into either verbal or written service
contracts with its customers depending on the size of the farming
operation. Petitioner supplies its customers with a cost sheet
1 The parties stipulated that respondent correctly reduced
petitioner’s taxable income for tax years 1996 and 1997 and,
correspondingly, correctly adjusted petitioner’s claimed net
operating loss amount for 1997.
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