Big Hong Ng - Page 19

          unreported income in the amounts determined by respondent.                  
               A final note with respect to the unreported income issue.  In          
          her posttrial brief, Ms. Ng asserts that "the nature of this case           
          cries out for a net worth analysis" and requests the Court to               
          "direct the parties to cooperate in an effort to do a net worth             
          analysis to reach a more accurate and just result."  We will not            
          accede to Ms. Ng's request.  Whatever Ms. Ng's net worth, it is not         
          relevant to whether the bank deposits and other income traced to            
          her during the years under consideration constitute income to her.          
          What happened to this income after Ms. Ng received it does not              
          change its character as income.  Moreover, there is "no requirement         
          that the Commissioner use the net worth method for computing                
          income."  Estate of Mason v. Commissioner, 64 T.C. at 662.                  
          Issue 2.  Hong Kong Restaurant Losses                                       
               We now turn our attention to whether Ms. Ng is entitled to             
          claimed pass-through losses from her solely owned S corporation,            
          Hong Kong Restaurant, Inc.  This, in turn, depends upon whether Ms.         
          Ng had sufficient basis in that corporation to claim the losses.            
               Pursuant to section 1366, S corporation income, losses,                
          deductions,  and  credits  are  passed  through  pro  rata  to              
          shareholders.  The amount that can be claimed is limited to the sum         
          of a shareholder's adjusted basis in the corporate stock, and his           

          Bank account are the income of Ms. Ng.                                      

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