Xavier J.R. and Sulochana D. Avula - Page 5




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          ration (Form 1120S), for IAMCM/PRINCIPIA for 1991 and Forms 1120S           
          for IAMCM for 1993 and 1994.  The EIN shown in each of those Forms          
          1120S was 43-1577193.  Petitioners did not prepare or file Forms            
          1120S for IAMCM/PRINCIPIA or IAMCM for 1992 or 1995.                        
               In April 1997, the agent advised petitioners about the rules           
          that require the filing of an election on Form 2553, Election by a          
          Small Business Corporation (Form 2553), in order for a small                
          business corporation to be treated as an S corporation.  No Form            
          2553 has been filed with respondent on behalf of IAMCM, IAMCM/              
          PRINCIPIA, or International Academy of Mathematical and Computer            
          Modelling, Inc.                                                             
               In the notice, respondent determined, inter alia, to disallow          
          the S corporation losses claimed in Schedules E of petitioners’             
          1993, 1994, and 1995 returns because “The election to be treated            
          as an S corporation (small business corporation) was determined to          
          be invalid.”                                                                
                                      Discussion                                      
               Petitioners used the same EIN for International Academy of             
          Mathematical and Computer Modelling, Inc., IAMCM, and IAMCM/                
          PRINCIPIA.  Thus, we conclude that those different names refer to           
          the same corporation.  For convenience, we shall hereinafter refer          
          to that corporation as IAMCM.                                               
               Petitioners concede that IAMCM never filed Form 2553 with              
          respondent.  The record does not disclose that IAMCM otherwise              






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