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years, respondent proposed to reallocate, and petitioner agreed
to the reallocation of, petitioner’s purchase price among the
various assets held by Culinary. As part of this adjustment, the
parties agreed to allocate $5 million of the purchase price to
the receivable from the City of Chicago for the TIF subsidy.
Based on the allocation of the $5 million of the purchase price
to the receivable from the City of Chicago for the TIF subsidy,
payments on the receivable should have been debited to cash and
credited to the receivable with no impact on petitioner’s taxable
income.
In fact, however, in accounting for payments that the City
of Chicago made in connection with the subsidy, petitioner did
not credit a receivable. Rather, the payments were received and
credited as shown in the following chart:
Account Account
Ref. Check No. Date Amount No. Description
A 96737341 1-27-95 $875,453.00 101565 Land-Contra
($625,000)
101900 Goodwill ($250,453)
B 96767315 3-10-95 1,955,451.00 101226 TIF moving expenses
C 96878721 7-5-95 52,189.43 101226 TIF moving expenses
D 96960850 11-24-95 422,704.97 101226 TIF moving expenses
E 97039857 4-15-96 330,780.50 780946 Misc. other income
F 97039858 4-15-96 1,363,421.10 780946 Misc. other income
Total $5,000,000.00
Various entries in the accounts shown above erroneously increased
or decreased petitioner’s taxable income for the years in issue.
The parties have agreed to the proper treatment of all of
the above accounts except with respect to entries into account
No. 101226, TIF moving expenses. That account had a zero balance
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Last modified: November 10, 2007