- 10 - We have reached that conclusion irrespective of whether the adjustment concerned the transactions of another entity and irrespective of whether that entity was taxable. Around 1989-90, a conflict arose amongst Federal Courts of Appeals over whether a passthrough corporate entity’s or a shareholder’s period for assessment controlled the Commissioner’s ability to determine a deficiency for an item flowing from the corporation to the shareholder. In Bufferd v. Commissioner, 506 U.S. 523 (1993), the Supreme Court addressed that conflict in the context of a subchapter S corporation and its shareholder. In Bufferd, it was held that adjustments to a shareholder’s income are governed by the shareholder’s period for assessment. B. Caselaw Development Petitioners and respondent each focus on the Supreme Court’s holding in Bufferd v. Commissioner, supra, to support their positions. Respondent contends that Bufferd, even though it involves a shareholder and an S corporation, stands for the general principle that it is the taxpayer’s return that controls the assessment period and not the return of the entity from which the adjustment may be derived. Conversely, petitioners contend that Bufferd is distinguishable and applies solely to S corporations and, accordingly, does not control situations where the adjustment involves a shareholder and a C corporation. The Supreme Court in resolving the circuit conflict heldPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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