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Unless otherwise noted, 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.
Petitioner is a dissolved Delaware corporation engaged in
wrapping up its business affairs. Petitioner was originally
named Walter S. Bandurski, Inc. In 1997 Walter S. Bandurski,
Inc., sold substantially all of its assets and changed its name
to WSB Liquidating Corp. WSB Liquidating Corp. was liquidated
and dissolved in 1998. Delaware law requires a dissolved
corporation to be continued as a corporate body for at least 3
years from the date of dissolution, for the purpose of
prosecuting and defending suits and engaging in other activities
to wrap up its affairs. See Del. Code Ann. tit. 8, sec. 278
(1991). The notice of deficiency in the instant case was issued,
and the petition was filed, in 1999, within 3 years of
dissolution, giving us jurisdiction. See Bared & Cobo Co., Inc.
v. Commissioner, 77 T.C. 1194 (1981). Hereinafter, references to
petitioner are to WSB Liquidating Corp. or Walter S. Bandurski,
Inc.
Following concessions by respondent, we must decide the
following: (1) Whether petitioner may deduct certain payments
made to Barbara Bandurski (Barbara) in 1993, 1994, and 1995 after
she had stopped working for petitioner. We hold that it may not.
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