- 41 -
In an amendment to petition filed pursuant to a motion for
leave to amend petition that we granted, petitioner alleged that
he was not entitled to BAC’s passthrough losses, reasoning that
BAC did not have a valid S corporation election on file at any
time during the relevant taxable years, and asserted that we
lacked jurisdiction over respondent’s BAC adjustments because
respondent never issued a notice of deficiency to BAC as a C
corporation. Respondent filed a notice of objection raising the
affirmative defenses of equitable estoppel and the duty of
consistency and an amendment to answer that clarified that he had
not placed the status of BAC as an electing corporation under
subchapter S at issue in the consolidated cases.
Section 1362(a) provides that small business corporations
may elect to be governed by the provisions of subchapter S and to
be taxed thereunder as passthrough entities. For such an
election to be valid, all shareholders of the corporation, as of
the date the election is made, are required to consent to the
election. Sec. 1362(a)(2); Wilson v. Commissioner, 560 F.2d 687,
689 (5th Cir. 1977), affg. T.C. Memo. 1975-92. The parties agree
that Mrs. Baldwin did not sign the Form 2553. The parties do not
agree, however, as to whether respondent may continue to treat
BAC as an S corporation for the years at issue. We examine the
duty of consistency to resolve the dispute.
Page: Previous 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 NextLast modified: May 25, 2011