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Discussion
Under Rule 121, Tax Court Rules of Practice and Procedure, a
summary adjudication may be made "if the pleadings, answers to
interrogatories, depositions, admissions, and any other
acceptable materials, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that a
decision may be rendered as a matter of law." Rule 121(b), Tax
Court Rules of Practice and Procedure. The parties agree that
whether discharge of indebtedness income increases a taxpayer's
basis in his S corporation stock may be decided as a matter of
law.
In Nelson v. Commissioner, 110 T.C. ___, filed this date,
the Court agreed with respondent that a shareholder of an
insolvent S corporation may not increase his or her basis to
reflect discharge of indebtedness income to the S corporation.
That Opinion is controlling here. Respondent's motions for
summary judgment will be granted, and petitioners' cross-motions
for partial summary judgment will be denied.
Appropriate orders
will be issued.
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Last modified: May 25, 2011