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would have jurisdiction to decide whether such adjustments result
in constructive corporate distributions and/or shareholder
contributions in these corporate level proceedings. The parties
agree that, in this context, constructive corporate distributions
and/or shareholder contributions qualify as subchapter S items.
As such, the corporation must either record these items on its
books and records or provide information regarding these items to
its shareholders.
Under the circumstances, we agree with petitioners that the
legal question whether such constructive corporate distributions
and/or shareholder contributions generally will result in
adjustments to the bases of the individual shareholders in their
S corporation stock constitutes a subchapter S item within the
meaning of the flush language of section 301.6245-1T(c)(2) and
(3), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 3004 (Jan.
30, 1987). Section 301.6245-1T(c)(2)(iii), Temporary Proced. &
Admin. Regs., supra, provides in pertinent part:
To the extent that a determination of an item relating
to a contribution can be made from these and similar
determinations that the corporation is required to
make, that item is a subchapter S item. To the extent
that the determination requires other information,
however, that item is not a subchapter S item.
In short, we conclude that the legal question concerning the
proper basis treatment in respect of a constructive corporate
distribution and/or shareholder contribution qualifies as an item
relating to a contribution or distribution that can be determined
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