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income of $3,888 ($4,492 - $604) in 1987, which should have been
reported on Schedule E, Supplemental Income and Loss (from rental
real estate, royalties, partnerships, S corporations, estates,
trusts, REMICs, etc.). On his 1988 return, petitioner reported a
loss of $4,702 from Frank’s Corner, which matches the loss
reported on the Schedule K-1 for that year.
OPINION
A shareholder in an S corporation must take into account, in
determining his tax, the shareholder’s pro rata share of the S
corporation’s “nonseparately computed income or loss”. Sec.
1366(a)(1)(B). Nonseparately computed income or loss means gross
income minus the deductions allowed to the corporation. Sec.
1366(a)(2). In other words, the taxpayer is responsible for his
distributive share of income realized by an S corporation in
which he is a shareholder. See Ishler v. Commissioner, T.C.
Memo. 2002-79.
Petitioner presents no challenge to respondent’s
determination, and he has therefore abandoned any arguments he
might have presented. We hold that petitioner realized Schedule
E income as determined by respondent and that petitioner should
have reported that amount on his 1987 return.
E. Unidentified Deposits
Bank deposits are prima facie evidence of income. DiLeo v.
Commissioner, 96 T.C. 858, 868 (1991), affd. 959 F.2d 16 (2d Cir.
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