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Corporation and the Laniers, which amount reflected the
difference between the FMV and the selling price/book value of
the Property determined by respondent. Respondent also
determined that petitioners were liable for additions to tax
pursuant to section 6661(a) for a substantial understatement of
income tax.
Respondent subsequently conceded that neither the
Corporation nor the Laniers are liable for additions to tax
pursuant to section 6661(a) for the taxable year 1987. Moreover,
respondent conceded at trial that the FMV of the Property was
$620,000 rather than $640,000 as previously determined.
Respondent further conceded that the Property's selling price was
$425,000. Finally, the parties have agreed that $24,370 of the
Corporation's net operating loss for 1989 remains available to be
carried back to the Corporation's taxable year 1987 if it is
decided that the Corporation failed to report taxable income
equal to or greater than that amount for 1987.
OPINION
We must decide the FMV of the Property. We must also decide
whether the transfer of $13,000 to the Committee by the
Corporation results in the imputation of a constructive dividend
to the Laniers.
I. Did the FMV of the Property exceed $425,000?
Section 311(b)(1) provides that if a corporation distributes
its property to its shareholder at a time when the FMV of the
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