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1. Held: The characterization of COD income is a
subchapter S item to which the FSAA relates, and is
therefore properly determined by this Court in an S
corporation proceeding. Secs. 6226(f), 6241, 6244,
6245, I.R.C.; sec. 301.6245-1T(a)(1)(iv) and (b),
Temporary Proced. & Admin. Regs., 52 Fed. Reg. 3003-
3004 (Jan. 30, 1987). Accordingly, this Court has
jurisdiction to hear this case. Clovis I v.
Commissioner, 88 T.C. 980, 982 (1987), applied.
2. Held, further, excluded COD income of an S
corporation does not qualify as a separately stated
item of tax-exempt income for purposes of sec.
1366(a)(1)(A), I.R.C. Nelson v. Commissioner, supra,
followed.
James R. O'Neill and John B. Spirtos, for petitioner.*
Bettie N. Ricca and Kathleen E. Whatley, for respondent.
MEMORANDUM OPINION
NIMS, Judge: By Notice of Final S Corporation
Administrative Adjustment (FSAA), respondent determined a
$317,583 adjustment to the S corporation return of income filed
by Chesapeake Outdoor Enterprises, Inc. (Chesapeake) for its
taxable year ending (TYE) March 19, 1992. Respondent further
determined an adjustment to Chesapeake's shareholders' aggregate
stock basis in the amount of $995,000.
* Subsequent to the briefing of this case, James C. Diana,
Esq., withdrew as counsel of record in this case.
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