James S Sparkman - Page 28

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        payments was made to HEH, which they contend reported these                   
        amounts on its own returns.                                                   
             Respondent now concedes that Mercury Solar PTO reported                  
        $81,921 of the HECO payment on its 1999 Federal income tax return.            
        Respondent contends, however, that the remaining $113,354 was also            
        income of the Mercury Solar business and should have been reported            
        by Sparkman in 1999.  We agree.                                               
             The Court does not permit a party to a stipulation to                    
        qualify, change, or contradict it except where justice may                    
        require.  Rule 91(e).  Justice does not so require in these cases.            
        Sparkman’s testimony does nothing to impugn his now-disputed                  
        stipulation but does much to bolster respondent’s position                    
        regarding the HECO payments.                                                  
             Sparkman testified that HECO provided rebates for installing             
        solar systems, but that HECO might take up to 6 months to process             
        the payments.  Sparkman testified that in order to receive the                
        benefit of the HECO payments more quickly--                                   
                  Mercury sought a factoring company * * * that would                 
             take that receivable and pay it in cash.  * * * And how                  
             it worked was Mercury submitted invoices that it was                     
             owed by Hawaiian Electric Company to ABA Funding [a                      
             factoring company] and ABA Funding took a percentage of                  
             the $800 rebate depending on the time period it fronted                  
             the money from HECO, and then HECO sent ABA Funding a                    
             check made payable to Mercury Solar which ABA Funding                    
             cashed via a power of attorney that it retained.                         
                  And apparently mid-1999 ABA Funding or Mercury                      
             Solar or HEH decided they wanted the funds directed into                 
             the Hawaii Environmental Holdings account instead of the                 
             Mercury Solar account.                                                   





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