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share of any partnership income, credits, loss, or deductions, he
is not entitled to deduct a loss, as provided by sections 702(a)
and 704(d), nor is he entitled to any loss for the alleged
worthlessness of his partnership interests. We hold petitioners
are not entitled to a partnership loss carryover in the amount of
$2,590,001 for 1994.
B. Subchapter C Corporation Losses
The remainder of petitioners' claimed loss, $723,240,
originated from petitioner's interests in two subchapter C
corporations. As stated previously, petitioner has not
established a loss was incurred by the entities in question.
Even if he had, petitioner is not entitled to deduct a loss
sustained by the corporation as a subchapter C corporation is not
a pass-through entity, such as a partnership.
As to the deductibility of the worthlessness of a taxpayer's
stock in a subchapter C corporation, section 165(g) provides for
a constructive sale or exchange for worthless stock, which
results in the loss’ being treated as a capital loss. No such
constructive sale or exchange is provided for a partnership
interest. See La Rue v. Commissioner, 90 T.C. 465, 484 n.22
(1988). The deductibility of the loss is limited by the
provisions of section 1211(b). However, petitioner has not
established his basis in the stock. See sec. 6001; Rule 142(a).
Therefore, respondent is sustained on this issue.
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