Frederick H. Jackson III and Pamela S. Jackson - Page 2

                                        - 2 -                                         
               Edward P. Phillips and Linda L. Snelling, for petitioners.             
               Reginald R. Corlew, for respondent.                                    

                       MEMORANDUM FINDINGS OF FACT AND OPINION                        
               HALPERN, Judge:  By notice of deficiency dated March 23,               
          1998 (the notice), respondent determined deficiencies in                    
          petitioners’ Federal income taxes as follows:                               
                    Year                  Deficiency                                  
                    1994                $6,057                                        
                    1995                5,786                                         
                         1996           8,038                                         
               Petitioners are husband and wife who, for the tax (calendar)           
          years here in issue, made a joint return of income.  During such            
          years, petitioner husband (petitioner) was a shareholder in an “S           
          corporation”, as that term is defined in section 1361(a).  The              
          issue for decision is whether, on account of petitioner’s                   
          guaranty of certain indebtedness of that corporation,                       
          petitioner’s adjusted basis in his stock of the corporation                 
          exceeded zero.  If it did, then petitioner would be entitled to             
          deduct some or all of his pro rata share of the losses of the               
          corporation.  For the reasons that follow, we find that, despite            
          such guaranty, petitioner’s adjusted basis in his stock did not             
          exceed zero.  Therefore, petitioner cannot deduct the losses in             
               Unless otherwise indicated, all section references are to              
          the Internal Revenue Code in effect for the years in issue, and             

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011