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discharged, then WAI received cancellation of indebtedness
income in some year other than 1987 or 1989.
Shortly after trial, respondent filed Motion for Leave
to File Amendments to Answers and to Conform the Pleadings
to the Proof. In her motion, respondent seeks to amend her
answers to raise, as an affirmative defense in both cases,
the allegation that petitioners are prohibited by the "duty
of consistency" from asserting that WAI's S corporation
election was terminated during any of the years in issue.
Respondent further seeks to amend her answers to allege
that, if the Court determines that Weeden's advances
constitute loans, then those loans were discharged and gave
rise to cancellation of indebtedness income in 1988. In an
opposition filed in response to respondent's motion,
petitioners argue that they are not prohibited from raising
the validity of WAI's S corporation election, and that the
Court does not have jurisdiction to determine a deficiency
for 1988 because respondent had not issued a notice of
deficiency for that year.
Subsequently, respondent issued a notice of deficiency
to each petitioner with respect to the 1988 taxable year.
In these notices, respondent determined that the advances
from Weeden in the amount of $103,093 were loans to WAI
which were discharged and gave rise to cancellation of
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