Paul A. Rendina and Janet Mae Rendina - Page 11

                                       - 11 -                                         

          this case, on its somewhat unsatisfactory record, in a way that             
          enables us to avoid making the earnings and profits/dividend                
          determination, and leave the related corporate taxable income               
          question for another day, if respondent should decide to pursue             
          it.                                                                         
               The substantive tax question before us is whether                      
          petitioner’s receipt of two condominium units, during the taxable           
          year 1988, was a taxable distribution from WSAI.  Respondent                
          determined that petitioner’s receipt of the last two units was a            
          dividend in the amount of $135,800 during the taxable year 1988.            
          Petitioner contended that his receipt of the units was not                  
          taxable to him because it was offset by discharge of WSAI’s debt            
          to him, and his assumption of the Foss, Navar, and Posa notes.              
          Petitioner also maintained that his receipt of the two units                
          could not be a dividend because WSAI had no earnings and profits.           
               Petitioner, in his reply brief, raised the alternative                 
          argument that he received the condominium units in de facto                 
          liquidation of WSAI, which would entitle him to use the basis of            
          his WSAI stock to compute his gain on the distribution, if we               
          should determine that his payments into WSAI represented equity             
          rather than debt.  Because it appeared to us that this position             


          10(...continued)                                                            
          related questions of corporation tax and transferee liability,              
          and shareholder gain on liquidation, see Schneider v.                       
          Commissioner, 65 T.C. 18 (1975).                                            




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011