U.R. Neely - Page 3




                                        - 3 -                                         
                                  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.  Petitioner resided in               
          Phoenix, Arizona, at the time he filed his petition in this case.           
          Petitioner’s Background                                                     
               Petitioner graduated from high school in 1972 and                      
          immediately thereafter began working in the air-conditioning                
          business by installing ductwork for his father.  In 1976, after             
          attending one semester of college, petitioner went to work for              
          Geottle’s Metal Products (Geottle).  Petitioner’s initial                   
          responsibilities at Geottle included installing sheet metal and             
          air-conditioning units.  He later worked his way up into the                
          estimating department, where he bid jobs on behalf of his                   
          employer.                                                                   
               In 1985, petitioner left Geottle and formed his own business           
          called the A/C Co. (the company).2  The company specialized in              
          the installation of air-conditioning equipment and associated               
          ductwork, and the company’s principal place of business was                 
          located in Mesa, Arizona.  The activities of the company during             
          1992 constitute the focus of respondent’s determination.                    



               2  The company was initially operated as a partnership                 
          between petitioner and an associate, whom petitioner later bought           
          out.  At all times during the 1992 tax year, the company was                
          operated by petitioner as a sole proprietorship.                            




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