Oren L. Benton - Page 5

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          administered for the benefit of creditors by a trustee.  The                
          trustee was responsible for all tax matters relating to the                 
          estates subject to the supervision of an oversight committee.               
          The creditors agreed in the plan that the tax attributes would go           
          to the debtor (petitioner) upon confirmation of the plan.                   
               The plan also provided that the interest in CBCLP was to be            
          placed in the NTC bankruptcy estate, and the CBM and CBI                    
          interests were to remain in the Benton estate.  The motivation              
          for not transferring these assets to the liquidating trust was to           
          maintain the S corporation status of CBM and CBI.  This limited             
          exception to the general transfer of assets to the liquidating              
          trust was approved by the Benton estate’s creditors and promoted            
          by Benton’s fellow S corporation shareholders.  Those                       
          shareholders were concerned about whether the placement of an               
          interest in an S corporation into a bankruptcy liquidating trust            
          would result in the termination of S corporation status.  Their             
          concern was focused upon whether a liquidating trust and/or                 
          liquidating trustee would be a qualified shareholder of an S                

               2 We note that sec. 1361(b)(1)(B) and (c)(3) permits the               
          estate of an individual in bankruptcy to become a shareholder of            
          an S corporation without triggering termination of S corporation            
          status.  Cf. Mourad v. Commissioner, 121 T.C. 1 (2003).  We                 
          surmise that the shareholders were concerned about S corporation            
          status in the event that the stock were transferred from the                
          bankruptcy estate to the liquidating trust.                                 

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