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After concessions by the parties, the issue remaining for
decision is whether petitioners may disregard their S corporation
and have its losses treated as partnership losses.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
At the time of the filing of their petition, Kandiah and
Nalini Jeyapalan (petitioners) resided in Ames, Iowa. Kandiah
Jeyapalan is a professor of civil engineering at Iowa State
University, and Nalini Jeyapalan is a former professor of
business finance at Fresno State University. Petitioners filed
joint Forms 1040, U.S. Individual Income Tax Return, for both
years in issue.
In 1985, petitioners acquired an interest in the A.S.K.
Partnership (partnership), a California partnership whose major
asset was a 16-unit apartment complex on 1.4 acres of land in
Fresno County, California (Fresno property). The partnership
issued Forms K-1, Partner’s Share of Income, Credits, Deductions,
Etc., to petitioners from 1985 through 1990.
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