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Respondent determined deficiencies in petitioners’ Federal
income taxes of $21,725 and $5,002 for the taxable years 1996 and
1997.
The issue for decision is whether certain payments received
by BMP Entertainment, Inc., an S corporation wholly owned by
petitioner husband, are includable in income in the year in which
they were received or in the year in which the corresponding
services were rendered.1
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Huntingdon Valley, Pennsylvania, on the date the petition was
filed in this case.
During the years in issue, petitioner husband (petitioner)
was the sole shareholder of an S corporation named BMP
Entertainment, Inc. (BMP). BMP’s business consists of providing
entertainment for parties in the form of disc jockey and related
services, primarily for bar mitzvahs. Petitioner often would
enter into contracts on behalf of BMP for services to be rendered
up to several years later. The contracts were based upon a
standard form contract which provided nearly identical terms for
each customer. In order to reserve a future date, customers were
1Respondent’s adjustment to petitioners’ miscellaneous
itemized deductions is computational and will be resolved by the
Court’s holding on the issue in this case.
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