- 19 -
1986 1987 1988
Briggs $581 $87,106 $210,142
The Morrises 581 1,106 199,490
For each of the taxable years 1986, 1987, and 1988,
petitioners each claimed, and respondent disallowed, pass-through
losses from Towers Development in excess of the basis amounts
stated above.
Discussion
The question, as framed by the parties, is whether, for
purposes of determining the pro rata shares of Towers Development
losses that petitioners may take into account under section
1366(d), petitioners had bases in their Towers Development stock
attributable to the construction loans that AMI made directly to
Towers Development. Relying on Selfe v. United States, 778 F.2d
769, 772 (11th Cir. 1985), petitioners argue that because they
were personally liable with respect to these construction loans,
guaranteed them, and pledged certain assets to AMI, their bases
in their Towers Development stock should include allocable shares
of these construction loans. Disputing petitioners’ factual
premises and distinguishing Selfe on its facts, respondent argues
that because petitioners made no economic outlays with regard to
these construction loans, they are entitled to no increased bases
therefrom.
An S corporation shareholder generally must take into
account a pro rata share of the corporation’s income, losses, and
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