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1. Unreported Income From the Operations of Mansour
Enterprises
The corporate income tax return for Mansour Enterprises for
1996 reported ordinary income of $53,400 from its operations
during that year. The IRS determined that Mansour Enterprises
was an S corporation during 1996 and that the Mansours’
distributable share of this income was $26,700. The Mansours
reported income from the operations of Mansour Enterprises in the
amount of $9,044 on their 1996 return. Accordingly, the IRS
determined that the Mansours should have included an additional
$17,656 in income.
2. Corporate Distributions
The Mansours received and deposited into their personal bank
account at First Union checks from Micca, net of repayments,
totaling $52,000. The IRS determined that the Mansours should
have reported this amount as dividend income.
The Mansours received and deposited into their personal bank
account at First Union checks from Mina of Forest City, net of
repayments, totaling $24,484. The IRS determined that Mina of
Forest City was an S corporation during 1996 and that the
Mansours had failed to establish their basis in their Mina of
Forest City stock. Accordingly, because the Mansours reported
income of $10,454 from the operations of Mina of Forest City on
their 1996 return, the IRS determined that the Mansours should
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