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corporation would normally be excepted from the unified S
corporation audit and litigation procedures as a “small S
corporation” within the meaning of section 301.6241-1T(c)(2)(ii),
Temporary Proced. & Admin. Regs., 52 Fed. Reg. 3002 (Jan. 30,
1987), Petito corporation made a valid election on its 1986
corporate income tax return to invoke the unified audit and
litigation procedures. See sec. 301.6241-1T(c)(2)(v)(B),
Temporary Proced. & Admin. Regs., supra at 3003.
Respondent filed an objection to petitioner’s motion
asserting that petitioner had failed to provide any documentary
evidence, such as Petito corporation’s 1986 income tax return, to
support the proposition that Petito corporation made a valid
election under section 301.6241-1T(c)(2)(v)(B), Temporary Proced.
& Admin. Regs., supra. Respondent further argued that, even
assuming that Petito corporation made such an election on its
1986 corporate income tax return, respondent should be permitted
to rely on Petito corporation’s tax return for 1992 on which
petitioner failed to check box G which states: “Check this box if
this S corp is subject to the consolidated audit procedures of
sections 6241 through 6245 (see inst before checking this box)”.
Petitioner filed a reply to respondent’s objection asserting
that respondent already had possession of Petito corporation’s
1986 income tax return. Petitioner further argued that the Court
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