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Consistent with Dial, Inc. v. Commissioner, supra, and
University Heights v. Commissioner, supra, we hold that the Court
lacks jurisdiction in these corporate level proceedings to decide
the amount of individual shareholders' bases in their stock in
Hatchery or Foods. It follows that if we should sustain
respondent's adjustments under section 482 and if we decide that
such adjustments result in constructive corporate distributions
and/or shareholder contributions, then we lack jurisdiction to
decide whether Foods shareholders have sufficient bases in their
stock to allow them to recognize their pro rata shares of Foods
losses. Consequently, we shall grant respondent's motion to
dismiss for lack of jurisdiction and to strike insofar as
respondent moves with respect to any such allegations.
The more difficult question is whether we have jurisdiction
in these corporate level proceedings to consider the legal
question whether constructive corporate distributions and/or
shareholder contributions generally will result in adjustments to
the individual shareholders' bases in their S corporation stock.
Significantly, the Court in Dial, Inc. v. Commissioner, supra,
was not presented with this particular issue. For the reasons
set forth below, we conclude that the Court does have
jurisdiction to consider this issue in these corporate level
proceedings.
As noted earlier, the parties agree that if the Court should
sustain respondent's section 482 adjustments, then the Court
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