Coggin Automotive Corporation - Page 21

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          entity, in which separate interests are owned by each of the                
          partners.  Subchapter K of the Internal Revenue Code (Partners and          
          Partnerships) blends both approaches. In certain areas, the                 
          aggregate approach predominates.  See sec. 701 (Partners, Not               
          Partnership, Subject to Tax), sec. 702 (Income and Credits of               
          Partner).  In other areas, the entity approach predominates.  See           
          sec. 742 (Basis of Transferee Partner’s Interest), sec. 743                 
          (Optional Adjustment to Basis of Partnership Property).  Outside of         
          subchapter K, whether the aggregate or the entity approach is to be         
          applied depends upon which approach more appropriately serves the           
          Code provision at issue.  See Holiday Village Shopping Ctr. v.              
          United States, 773 F.2d 276, 279 (Fed. Cir. 1985); Casel v.                 
          Commissioner, 79 T.C. 424, 433 (1982); Conf. Rept. 2543, 83d Cong.,         
          2d Sess. 59 (1954).                                                         
               Respondent argues that the legislative intent underlying the           
          enactment of section 1363(d) requires the application of the                
          aggregate theory.  Respondent asserts that Congress enacted section         
          1363(d) in order to ensure that the corporate level of taxation be          
          preserved on built-in gain assets (such as LIFO reserves) that fall         
          outside the ambit of section 1374.  In this regard, respondent              
          contends that failure to apply the aggregate theory to section              
          1363(d) would allow the gain deferred under the LIFO method to              
          completely escape the corporate level of taxation upon a C                  
          corporation’s election of S corporation status and would eviscerate         

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