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Respondent determined a deficiency of $420 in petitioner’s
1999 Federal income tax.
The issue for decision is whether petitioner’s reported pro
rata share of an S corporation’s loss should be reduced after the
corporation’s reported loss was examined and adjusted by
respondent.
Petitioner resided in Lincoln, Rhode Island, at the time she
filed her petition.
Some of the facts in this case have been stipulated and are
so found.
During 1999, petitioner was a revenue agent for the Internal
Revenue Service. She also was a 10-percent shareholder of King’s
Grant Water Company (the water company), an S corporation. The
water company sold water to people living in North Attleboro,
Massachusetts.
For 1999, the water company filed a Form 1120S, U.S. Income
Tax Return for an S Corporation. The water company reported an
ordinary loss of $16,211.26 on Schedule K, Shareholders’ Shares
of Income, Credits, Deductions, etc., attached to its Form 1120S.
The water company reported $1,621.13 as petitioner’s pro rata
share of the ordinary loss on Schedule K-1, Shareholder’s Share
of Income, Credits, Deductions, etc.
For 1999, petitioner reported a distributive loss from the
water company of $1,621 (rounded) on Schedule E, Supplemental
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