- 4 -
Respondent subsequently conceded the additions to tax
pursuant to section 6661 in docket No. 20691-91 for the 1987 and
1988 taxable years in the amounts of $2,757 and $2,024,
respectively.
During the tax periods in issue, Guaranteed Rental Systems,
Inc. (Guaranteed), was an S corporation not subject to the
unified audit and litigation procedures of the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, sec.
402(a), 96 Stat. 324, 648,3 and all of Guaranteed's adjustments
flowed directly through to the shareholders' tax returns and are
reflected in the deficiencies shown in docket Nos. 20690-91 and
20691-91. For the fiscal year ending May 31, 1987, ABC Rentals
of San Antonio, Inc. (ABC), was a C corporation, and the notice
of deficiency in docket No. 20689-91 relates to deficiencies
during that fiscal year only. Thereafter, ABC applied for and
was granted S corporation status. For the tax period ending
December 31, 1987, and the tax year ending December 31, 1988, ABC
was a non-TEFRA subchapter S corporation, and all of ABC's
adjustments flowed through to its sole shareholder, John P.
Parsons, and are reflected in the deficiencies shown in docket
No. 20691-91.
3Sec. 6244 provides that the TEFRA provisions relating to
the assessment and determination of partnership items are
extended to the assessment and determination of subch. S items.
Sec. 301.6241-1T(c), Temporary Proced. & Admin. Regs., 52 Fed.
Reg. 3003 (Jan. 30, 1987), exempts small S corporations, defined
as corporations with 5 or fewer shareholders, from the unified
audit and litigation procedures for taxable years the due date of
the return of which is on or after Jan. 30, 1987.
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