121 T.C. No. 1
UNITED STATES TAX COURT
ALPHONSE MOURAD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7873-01. Filed July 2, 2003.
In 1996, P’s wholly owned S corporation filed a
petition for bankruptcy reorganization. The U.S.
Bankruptcy Court appointed an independent trustee to
administer the bankruptcy estate. In 1997, a plan of
reorganization was confirmed, and the S corporation
sold its principal assets. The bankruptcy trustee
filed a Form 1120S for the S corporation’s 1997 tax
year, which reported a large gain. P failed to file
his individual income tax return for 1997. From
information disclosed by the S corporation on its 1997
return, R determined P’s income and issued a notice of
deficiency.
Held: The filing of a bankruptcy petition for
reorganization neither terminates an S corporation’s
tax status nor creates a separate taxable entity. P is
liable for tax on the income of the S corporation.
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