Premium
Contributions in Aid of Construction Are a Tax Liability
Publication year - 1991
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.1002/j.1551-8833.1991.tb07093.x
Subject(s) - taxable income , liability , limited liability partnership , general partnership , commission , tax reform , gross income , state income tax , double taxation , business , economics , public economics , finance , accounting , strict liability
Kirkwood Partnership entered into an agreement with the Indian Rock Water Co. to provide contributions in aid of construction (CIAC) to obtain water service for Kirkwood's new development. Under the Tax Reform Act of 1986, Indian Rock was required to include such contributions as part of its gross taxable income. Indian Rock included the CIAC‐related tax liability as an expense chargeable to servicing Kirkwood's development. Kirkwood petitioned the state public utility commission, seeking to disallow Indian Rock from collecting the income tax liability. The commission ruled against Kirkwood.