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year was the period from October 25 through November 24, the day
before Thanksgiving.7 Thus, the election had to be made on or
before November 24, 1976, in order to be timely.8
As previously noted, a presumption of correctness attaches
to respondent’s notice of deficiency, necessarily including, in
(...continued)
time during the month preceding such first month. Such
election shall be made in such manner as the Secretary
shall prescribe by regulations.
Obviously, a corporation could not elect S corporation status in
the month preceding its first month of existence.
7 The regulations provide:
In the case of a new corporation whose taxable year
begins after the first day of a particular month, the
term "month" means the period commencing with the
beginning of the first day of the taxable year and
ending with the close of the day preceding the
numerically corresponding day of the succeeding
calendar month * * *. [T]he first month of the taxable
year of a new corporation does not begin until the
corporation has shareholders or acquires assets or
begins doing business, whichever is the first to occur.
Sec. 1.1372-2(b)(1), Income Tax Regs. (1976). JPS was not
incorporated until Oct. 25, 1976. The regulation quoted above
refers to the first month of the taxable year of the corporation,
and there was no corporation in existence prior to Oct. 25.
Thus, the first month of JPS's taxable year could not have begun
prior to Oct. 25. At the same time, respondent does not dispute
that JPS either had shareholders, had acquired assets, or began
doing business as of Oct. 25. Accordingly, for purposes of
petitioner's motion we treat Oct. 25 as the beginning of the
first month of JPS's first taxable year.
8 There is no evidence or allegation of any other elections
or Forms 2553 besides the one under discussion here. In
particular, there is no evidence that other Forms 2553 were filed
during the first or last month of any of JPS's taxable years.
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