- 3 -
1999), the $1,583,365 of discharge of indebtedness income does
not result in a basis increase in the Scientific Plastics, Inc.,
stock. In Nelson, we held that an S corporation's shareholder
may not increase his basis to reflect the S corporation's
excluded discharge of indebtedness income. See id. Petitioners
do not attempt to distinguish Nelson, but instead contend that
Nelson was decided incorrectly. This case is indistinguishable
from Nelson, and we need not reiterate our analysis.
Accordingly, we hold that the discharge of indebtedness income
does not increase petitioners’ stock bases.
To reflect the foregoing,
Decisions will be entered
under Rule 155.
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Last modified: May 25, 2011