- 27 -
F.3d at 1034; Gershkowitz v. Commissioner, 88 T.C. 984, 1009
(1987).
Thus, we decline to adopt petitioner's construction which,
essentially, grants him an unwarranted benefit in addition to the
exclusion from gross income for an insolvent S corporation. We
believe that our construction is narrowly drawn and consistent
with the statutory design and intent. Nelson v. Commissioner,
supra at 1154.
Accordingly, we hold that an S corporation shareholder may
not increase basis in stock due to excluded COD income.
To reflect the foregoing,
Decision will be entered
under Rule 155.
Reviewed by the Court.
COHEN, CHABOT, SWIFT, JACOBS, GERBER, WELLS, RUWE, CHIECHI,
LARO, VASQUEZ, and GALE, JJ., agree with this majority opinion.
BEGHE, J., concurring: I concur in the ultimate conclusion
of the majority opinion and the part of it that Judge Foley
agrees with, that a straightforward inquiry under section 108
suffices to produce the conclusion. No extended exegesis to
determine the character of COD of an insolvent S corporation as
“tax-exempt income”, as “deferred income”, or as an unrealized
“tax nothing” is needed.
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