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Darrell D. Hallett, Larry N. Johnson, Robert J. Chicoine,
and John M. Colvin, for petitioner.
Cathy A. Goodson and William A. McCarthy, for respondent.
OPINION
TANNENWALD, Judge: This case comes before us on cross-
motions for partial summary judgment by the parties under Rule
121.1 The issues for decision are:
(1) Whether suspended passive activity losses (PAL's)
incurred by a closely held C corporation that later elects to be
an S corporation may be deducted by the then S corporation in the
year the corporation disposes of its entire interest in the
activity generating the losses, and if not,
(2) whether the basis of the assets used in the activity may
be recomputed to restore amounts for portions of the suspended
PAL's attributable to depreciation (and the gain or loss from the
disposition commensurately recalculated).
Summary judgment as to those issues is appropriate in this
case because there is no genuine issue of fact, and a decision
can be made as a matter of law. Rule 121(b); Northern Ind. Pub.
Serv. Co. v. Commissioner, 101 T.C. 294, 295 (1993).
1 Unless otherwise indicated, all statutory references are
to the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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