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under section 7491(a). Barela v. Commissioner, T.C. Memo. 2004-
175.
An S corporation’s loss flows through to its shareholders on
a pro rata basis. Sec. 1366(a). Section 6037(c) requires
consistent treatment between the S corporation and shareholder’s
returns. It follows that adjustment to an S corporation’s loss
requires the adjustment to a shareholder’s pro rata share of that
loss. Any remedy that petitioner may have against the water
company lies in State court, rather than with this Court.
On this record, we conclude that petitioner’s reported pro
rata share of the water company’s loss should be reduced by the
amount determined by respondent. Accordingly, we sustain
respondent’s determination.
Contentions we have not addressed are irrelevant, moot, or
without merit.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.
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Last modified: May 25, 2011