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through September 1, 1994, Fox Trot incurred indebtedness to Mr.
Yates of $853,557. Accordingly, Mr. Yates was entitled to
increase his basis in Fox Trot by $2,774,706 as a result of the
loans and capital contributions made to Fox Trot before Mr. Yates
transferred the Fox Trot stock to Mrs. Yates. Culnen v.
Commissioner, T.C. Memo. 2000-139 (allowing an S corporation
shareholder to increase his basis as a result of similar
transactions).
The uncontradicted and credible testimony of Mr. Yates
established that Mr. Yates made gifts to Mrs. Yates of the
subsequent transfers from Adena. Mr. Yates, however, skipped the
steps of having Adena transfer such funds to him, depositing the
funds into petitioners’ joint account, and then having Mrs. Yates
write a check to Fox Trot. Accordingly, these transfers
increased Mrs. Yates’ basis in Fox Trot.
Contentions we have not addressed are moot, irrelevant, or
meritless.
To reflect the foregoing,
Decisions will be entered
under Rule 155.
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Last modified: May 25, 2011