- 3 -
of the shares of BP Concessions. On or about October 1, 1988, BP
Concessions elected to become an S corporation pursuant to
section 1362(a).
In December 1996, petitioner and Mr. Foster agreed in a
board meeting to terminate BP Concessions’ S corporation status
by revoking the S corporation election. They decided to revoke
the S corporation election on account of an anticipated and
substantial distributive share of income based on “a lowering of
the cost of goods which was going to result in an increase from
prior years” to the shareholders.
Petitioner was responsible for revoking the election. For
the revocation to be effective for 1997, petitioner had to revoke
the S corporation election by March 17, 1997. Petitioner failed
to revoke the S corporation election by March 17, 1997, because
he was ill with cancer. Indeed, the parties stipulated that BP
Concessions was an S corporation during the years 1997 and 1998.
As of March 13, 2003, the date of the trial in this case,
petitioner had not properly revoked the S corporation election
for BP Concessions.
Keith Meyers, the accountant who prepared BP Concessions’
tax return for 1997, was unaware of the shareholders’ desire to
terminate the S corporation election. On October 20, 1998,
petitioner signed the Form 1120S, U.S. Income Tax Return for an S
Corporation, for 1997. The Schedule K-1, Shareholder’s Share of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011