- 4 -
The books and records of WJS-LLP and of WJS-Partnership were
maintained and their Federal income tax returns were filed using
the cash method of accounting.
Each year, however, for Federal income tax purposes income
from the harvest and sale of sugar beet crops was and is reported
by WJS-LLP and by WJS-Partnership not on the basis of when the
partnerships sell the crops, receive the proceeds, or realize the
income therefrom but rather on the basis of the following
formula: 65 percent of the income realized from the sale of the
sugar beet crops is reported in the year of the harvest of the
crops, and the remaining 35 percent is reported in the year
following the harvest.
Consistently, on information tax returns, Forms 1065, U.S.
Return of Partnership Income, submitted to respondent each year,
WJS-LLP and WJS-Partnership allocate among petitioners herein the
income from the harvest and sale of sugar beet crops not on the
basis of when the partnerships receive the proceeds or realize
income from the sale of the sugar beet crops, but rather on the
basis of the above formula: namely, 65 percent in the year of
harvest and 35 percent in the year following the harvest.
If WJS-LLP’s and WJS-Partnership’s 2001 sugar beet crops had
not been destroyed and if the crops had been sold in 2001, for
2001 WJS-LLP and WJS-Partnership would have allocated to
petitioners and reported to respondent a total of 65 percent of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: March 27, 2008