LB&M Associates, Inc., Rudy J. Alvarado, Tax Matters Person - Page 3

                                         -3-                                          
               During 1990, LB&M made a cash distribution (1990 cash                  
          distribution) to each of the selling LB&M shareholders.  None of            
          those shareholders reported any capital gain with respect to the            
          1990 cash distribution in the Federal income tax return that each           
          such shareholder filed for 1990.  That is because, except for one           
          of the selling LB&M shareholders,1 the treatment by each of those           
          shareholders of the alleged LB&M liability as an increase in such           
          shareholder's basis in LB&M caused such shareholder's basis in              
          LB&M to exceed such shareholder's 1990 cash distribution.                   
               Respondent mailed notices of final S corporation administra-           
          tive adjustment for 1990 (1990 FSAA) and 1991 (1991 FSAA),                  
          respectively, to Steve Doerfel (Mr. Doerfel) in his capacity as             
          the tax matters person (original tax matters person) of LB&M.  In           
          the 1990 FSAA, respondent made adjustments to certain subchapter            
          S items of LB&M and purported to make adjustments to (1) the                
          capital gains of certain shareholders of LB&M "on Cash Distribu-            
          tions in Excess of Basis" and (2) the capital losses of certain             
          of those shareholders because of the "basis limitation provisions           
          of Section 1366(d)".                                                        
               The original tax matters person timely filed a petition with           
          respect to the 1990 FSAA and a petition with respect to the 1991            


          1  One of the selling LB&M shareholder's basis in LB&M would have           
          equaled or exceeded the 1990 cash distribution that such share-             
          holder received even if such shareholder had not increased his or           
          her basis in LB&M by the alleged LB&M liability to such share-              
          holder.                                                                     




Page:  Previous  1  2  3  4  5  6  Next

Last modified: May 25, 2011