- 2 -
petitioners must report as income in 1996 amounts paid during
1996 by Pepsi-Cola Co. (Pepsi) to Daniel E. Harkins' (Mr.
Harkins') solely owned S corporation and (2) whether petitioners
must report as income in 1996 amounts paid in 1997 by Pepsi which
are associated with the S corporation's activities in 1996.
Because the S corporation reports its income on the accrual
method of accounting, we evaluate the above issues within the
context of sections 446 and 451 and the regulations thereunder.2
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time they filed
their petition, petitioners' residence was in Paradise Valley,
Arizona.
Mr. Harkins operates various motion picture theaters
throughout the State of Arizona, most of which are located in the
greater Phoenix area. He conducts his movie theater business
through Harkins Amusement Enterprises, Inc. (the theater
1(...continued)
individuals. As to certain Schedule E, Supplemental Income and
Loss, income determined and deductions disallowed by respondent,
petitioners concede that they have additional income of $5,195
and that they are not entitled to deductions of $55,744 for rent
and $46,478 for repair and maintenance. Respondent concedes that
$7,941 in interest income is not subject to taxation.
2 Section references are to the Internal Revenue Code in
effect for 1996, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
Page: 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