Sales Company, which he operated thereafter as a sole proprietorship.
5. In 1964, plaintiff Thomas Stanton filed an election to have his sole proprietorship taxed as a corporation under the Internal Revenue Code of 1954, a procedure then available under Section 1361 of the Code.
6. This election was made formally by Thomas Stanton in a letter dated February 17, 1964, addressed to the District Director of Internal Revenue, and beginning with the calendar year 1964, plaintiff Stanton filed federal corporate income tax returns (Form 1120) on behalf of his business.
7. The effect of this election by plaintiff Stanton was to retain his status as a sole proprietor for all purposes except federal income taxation, with respect to which the business was treated as an actual corporation owned entirely by plaintiff Stanton.
8. As the result of legislative action, all outstanding Section 1361 elections, including that of plaintiff Stanton, would terminate by law on January 1, 1969, unless the election was terminated earlier.
9. Prior to this amendment, which became effective on April 14, 1966, an election to be taxed as a corporation under Section 1361 was binding and irrevocable except in very limited circumstances.
10. The amendment permitted free revocation of the election at any time after the effective date of the legislation.
11. Faced with an involuntary termination of his election on January 1, 1969, plaintiff elected to terminate his election voluntarily on November 1, 1966. The Balance Sheet of Stanton Refractory Sales Company reflected the following as of October 31, 1966:
Accounts Receivable 45,561.18
Furniture and Equipment
(Net of depreciation) 10,242.75
Insurance Deposit 140.00
Telephone Deposit 100.00
TOTAL ASSETS $217,503.08
Accounts Payable $ 50,406.33
Accrued Payroll Taxes 1,746.96
Provision for Federal Income Taxes 4,933.52
Paid-In Capital $ 22,067.54
Retained Earnings 138,348.73
TOTAL LIABILITIES $217,503.08
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