Mel T. Nelson - Page 30

                                       - 30 -                                         

                                         II.                                          
               I mush on in an attempt to make sense of the stipulated                
          record and arrive at an understanding of what happens to the                
          current year’s losses of an insolvent S corporation that                    
          experiences COD.  The case at hand is not the most satisfactory             
          vehicle for this purpose because the stipulation of facts is so             
          terse--the only documents in evidence are the statutory notice,             
          petitioner’s 1991 income tax return, and MAI’s 1991 Form 1120S--            
          as to raise and leave unanswered questions about what actually              
          happened and the significance of what was shown and claimed on              
          the MAI Form 1120S and petitioner’s return.3                                
               Judge Foley’s reference to the “application of section                 
          108(b) and the resulting reduction of tax attributes (i.e., MAI’s           
          net operating loss)” adverts to an issue that the parties didn’t            
          really address.  This issue arises from the fact, which might be            
          inferred from the parties’ stipulation “that the COD income of              
          $2,030,568 exceeded losses of MAI by $1,375,790 in 1991", that,             
          as respondent asked the Court to find as a fact, “MAI had losses            
          of $654,778".  The amount by which MAI’s COD of $2,030,568                  
          exceeded those losses is $1,375,790, the portion of petitioner’s            
          claimed basis in the stock of MAI that respondent disallowed.               

               2(...continued)                                                        
          didn’t file a Form 982 of its own with its 1991 Form 1120S.                 
               3 Perhaps the Rule 155 computation to be submitted by the              
          parties will clarify these matters.                                         




Page:  Previous  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  Next

Last modified: May 25, 2011