Alphonse Mourad - Page 1

                                   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                 
                    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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