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corporation as having made a valid election under section
1368(e)(3)(A).1
Background
The parties submitted this case fully stipulated pursuant to
Rule 122. The stipulation of facts is incorporated herein by
this reference. Petitioners resided in Fairbanks, Alaska, at the
time they filed their petition.
During the taxable year 1992 and previous years, petitioners
owned 90 percent of the shares of issued and outstanding common
stock of Earth Movers of Fairbanks, Inc. (EMFI). Petitioners'
children owned the remaining 10 percent of the issued and
outstanding common stock.
EMFI was incorporated under the laws of the State of Alaska
in 1974. EMFI reported its taxes on a fiscal year basis
beginning on November 1 and ending on October 31. Prior to the
taxable year commencing November 1, 1986, EMFI was actively
engaged in business as a C corporation and was taxable as such
under the internal revenue laws. EMFI elected to be taxed as an
S corporation under the internal revenue laws for the taxable
year ending October 31, 1987, and years thereafter.
1Unless otherwise indicated, all section 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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