-86-
As a result of IRA’s purchase, KWJ Corp. was included as a
subsidiary on IRA’s 1979 consolidated tax return. Exh. 10, at
7, 19. IRA’s 1979 consolidated return reflected KWJ Corp.’s
assets, liabilities, and net worth as of January 1, 1979, as
follows:
Assets Amount
Cash $40,626
Accrued income 108,521
Total assets 149,147
Liabilities
Mortgages, notes, and bonds payable 19,400
Accrued expenses 14,663
Total liabilities 34,063
Net Worth 115,084
Common stock 1,000
Retained earning unappropriated 53,968
Previously taxed income 60,116
Total stockholder equity 115,084
Exh. 10.
KWJ Corp.’s accrued income of $108,521 as of January 1,
1979, nearly equaled the sum of the $54,848 and $60,739
($115,587) payments that KWJ Corp. received from Hyatt Corp. in
1976 and 1977, respectively. Exh. 9103, at 12; Exh. 4003. IRA’s
1979 consolidated return reported that KWJ Corp. had gross
receipts of $171,027 for 1979, and $51,308 of that amount (the 30
percent paid to Weaver) was deducted as a commission expense.
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