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1991, having determined that the underpayments of tax were "due
to negligence or intentional disregard of rules and regulations."
Discussion
Inclusion of COD Income in Basis
Petitioners argue that petitioner was correct in increasing
the basis in his ECC stock by his share of the COD income. In
Nelson v. Commissioner, 110 T.C. 114 (1998), we held that COD
income realized and excluded from gross income under section
108(a) does not pass through to shareholders of an S corporation
as an item of income in accordance with section 1366(a)(1) so as
to enable an S corporation shareholder to increase the basis of
his stock under section 1367(a)(1). Petitioners do not
distinguish this case from Nelson v. Commissioner, supra. They
ask us to overrule a recent Court-reviewed opinion, as being
decided incorrectly. We decline to do so. Accordingly, we hold
that petitioner may not increase the basis in his ECC stock by
his share of the COD income.
Accuracy-related Penalties
Section 6662(a) imposes an accuracy-related penalty of 20
percent on any portion of an underpayment of tax that is
attributable to items set forth in section 6662(b). Included in
those items is negligence or disregard of rules or regulations.
Sec. 6662(b)(1). Section 6662(c) provides that for purposes of
section 6662, "the term 'negligence' includes any failure to make
a reasonable attempt to comply with the provisions of this title,
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