- 5 -5
Federal income tax return for the 1989 tax year that reported
sales of $707,231 and a net loss of $159,139. Petitioner did not
sign the return but was designated on it as the Corporation's
"tax matters person".
IV. Petitioner's 1990 and 1991 Tax Returns
Petitioner filed both his 1990 and 1991 Federal income tax
returns after the due date. His 1990 return was signed on
January 15, 1992, and received by respondent on February 14,
1992. His 1991 return was signed on April 27, 1992, and received
by respondent on April 29, 1992.
On his returns, petitioner reported that he owed no tax in
either 1990 or 1991. He reached this result by offsetting his
income with the Corporation's net operating losses. Respondent
disallowed petitioner's use of the Corporation's losses on the
ground that the Corporation had not made a valid subchapter S
election, and as a result, the Corporation's losses did not pass
through to its shareholders.
Petitioner ultimately conceded that he was not entitled to
deduct the losses of the Corporation on his 1990 and 1991
individual income tax returns. He claims, however, that he was
entitled to deduct losses that more than offset his tax liability
for those years.
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