Patrick E. Catalano - Page 9

                                        - 9 -                                         

          corporation is an S corporation, he, and not the corporation, is            
          liable for payment of income taxes on the resulting additional              
          income.  See secs. 1363(a), 1366.  Petitioner further points out            
          that, as the lessor of the boats to the corporation, he has                 
          previously reported the amount of the boat lease payments as                
          income on his individual returns.  Thus, he concludes,                      
          disallowance of the deductions at issue results in his being                
          taxed twice on the same income.5  To prevent this result, he                
          argues that his individual income for the years at issue should             
          be reduced by the amount that he reported as boat lease income              
          (that is, net of deductions previously claimed by him against               
          that income).6                                                              
               We note at the outset that petitioner is selective in his              
          objection to double taxation.  On the returns as filed for the              
          years at issue, petitioner took positions with respect to the               

               5 We note that the additional income of petitioner’s S                 
          corporation resulting from the disallowance of the boat lease               
          deductions does not equal the boat lease net income reported by             
          petitioner in his individual capacity, because petitioner took              
          deductions for repairs, maintenance, insurance, interest, taxes,            
          docking fees, and depreciation against the boat lease income                
          reported on his individual returns.                                         
               6 At trial petitioner submitted amended returns for the                
          years at issue, apparently reflecting the removal of net boat               
          lease income (after deductions previously taken for interest,               
          maintenance, depreciation, etc.) from his individual returns.  We           
          treated these submissions as petitioner's motion for leave to               
          amend petition, which we granted to permit consideration of                 
          petitioner’s claim that his income should be reduced by the                 
          amount reported as net boat lease income.                                   

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

Last modified: May 25, 2011