- 2 -
stipulation of fact, stipulation of settled issue and remaining
issue, and the accompanying exhibits are incorporated herein by
this reference.
This case arises from a Notice of Final S Corporation
Administrative Adjustment (FSAA) issued by respondent adjusting
Color Arts, Inc.’s (Color Arts) Federal income tax return for its
taxable year ending December 31, 1996 (1996 return). Respondent
concluded, and petitioner has now conceded, inter alia, that a
$245,000 deduction for accrued vacation pay claimed on Color
Arts’s 1996 return was not allowable.2 The sole issue for
decision is whether Color Arts’s method of accounting for
vacation pay has been changed so as to require an adjustment
pursuant to section 481(a).
Background
During the period at issue, Color Arts was an S corporation
within the meaning of the Code. Color Arts filed Form 1120S,
U.S. Income Tax Return for an S Corporation, for its tax year
ended December 31, 1996. Color Arts’s overall method of
accounting was the accrual method.
At the time the FSAA was issued and the petition was filed,
Color Arts’s principal place of business was located in Racine,
Wisconsin.
2The FSAA contained another adjustment, but that issue was
resolved by the parties.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011