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Discussion
As previously stated, respondent has conceded that the
adjustment to shareholder basis was inappropriate at the
shareholder level. Consequently, the remaining issues are: (1)
Whether we have jurisdiction to decide this case, and, if so, (2)
whether COD income excluded from the gross income of an S
corporation pursuant to section 108(a) qualifies as a separately
stated item of tax-exempt income for purposes of section
1366(a)(1)(A).
The question of jurisdiction is fundamental and can be
raised at any time by either party or by the Court. Naftel v.
Commissioner, 85 T.C. 527, 530 (1985); Estate of Young v.
Commissioner, 81 T.C. 879, 880-881 (1983). We have jurisdiction
to determine whether we have jurisdiction. Pyo v. Commissioner,
83 T.C. 626, 632 (1984); Kluger v. Commissioner, 83 T.C. 309, 314
(1984).
In the instant case, our jurisdiction turns on whether the
unified subchapter S audit and litigation provisions in effect
for the year at issue, set forth at sections 6241 through 6245,
are applicable. (Sections 6241 through 6245 were repealed by the
Small Business Job Protection Act of 1996, Pub. L. 104-188, sec.
1307(c)(1), 110 Stat. 1755, 1781, for tax years beginning after
December 31, 1996.) If not, we must dismiss this case for lack
of jurisdiction. See Albatrick, Inc. v. Commissioner, T.C. Memo.
1995-119.
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