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1985 through 1993, petitioner included taxable income of
$5,636,762, $16,627,101, $2,035,928, $2,601,628, $3,213,184,
$3,563,858, $3,569,015, $3,569,015, and $3,569,015, respectively.
The adjustments in dispute in the 1985-90 taxable years are the
net differences between the amounts of nonrefundable commitment
fees received and reported for tax purposes, as follows:
Nonrefundable Amount in
Commitment Fees Received Reported Dispute 1985-90
1985 $9,506,398 $5,636,762 $3,869,636
1986 16,489,524 16,627,101 (137,577)
1987 9,408,907 2,035,928 7,372,979
1988 4,525,606 2,601,628 1,923,978
1989 4,892,445 3,213,184 1,679,261
1990 2,805,392 3,563,858 (758,466)
In computing its taxable income for the year 1985,
petitioner overstated its income attributable to such receipts
under its method of accounting in the amount of $883,638 as a
result of a computational error.
During the years 1985 through 1988, and 1990, originators
failed to deliver at least 67 mortgages specified in prior
approval purchase contracts to petitioner.15 See appendix, which
lists these 67 contracts. As a result, the 1.5-percent
refundable portion of the 2-percent commitment fee was forfeited
to petitioner. During the relevant period, these 67 contracts
15 Petitioner was unable to locate records of the prior
approval purchase contracts executed in 1989 that would identify
the mortgages from that year, if any, where the specified
mortgages were undelivered.
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