- 8 - and be treated as a partnership because they lacked enough basis to realize their full amount of flow-through loss. Before incorporating, the taxpayers as partners had personally guaranteed a partnership loan. The loan was not includable in their basis in the S corporation. The taxpayers had not transferred title in the bar and bowling alley to the corporation; however, they caused the corporation to report ownership of the property on its Federal income tax returns. This Court decided that, because the S corporation had legally incorporated under State law, filed an election to be taxed as an S corporation, filed corporate returns, and held itself out to the public as the owner and operator of the bowling alley, it had sufficient business activity to establish corporate existence. This Court also decided that, because the taxpayers incorporated their partnership to achieve limited liability from tort, the corporation had a substantial business purpose. See id. We conclude that ASK Properties is indistinguishable from the corporations in Skarda and Doe. Petitioners have stipulated that, since its formation, ASK Properties has engaged in the business of renting out the apartments on the Fresno property. As in Skarda and Doe, petitioners caused ASK Properties to hold itself out to the public as the legal entity that owns and operates the Fresno property even though title was never formally transferred to the corporation. In addition, petitioners causedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011