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evidence in the record that indicates whether Pyramid elected to
be taxed under subchapter S at the time that it made
distributions to the Gownis in 1999.
At trial, respondent conceded that a mathematical error had
occurred during the analysis of the checks that the Gownis
received from Ava Anthony and deposited into their personal bank
accounts during 1998. Accordingly, the amount of the checks that
the Gownis received from Ava Anthony and deposited into their
personal bank accounts, net of repayments, must be adjusted from
$13,640 to $1,640 for 1998 to reflect this concession.
1. Petitioners’ Arguments
Except for the concession that petitioners achieved with
respect to the dividend distribution that the Gownis received
from Ava Anthony in 1998, petitioners have not challenged the
computational accuracy of respondent’s analysis of the deposits
of checks from petitioners’ business entities into petitioners’
personal bank accounts. Petitioners have, however, asserted
several arguments as to the nontaxable nature of some of the
distributions that they received from three of their business
entities. Specifically, petitioners argue that (1) the
distributions that the Gownis received from Mina of Forest City
and Bishoy in 1999 were repayments of loans that the Gownis had
made to those entities in prior years; (2) respondent failed to
offset the distributions that the Gownis received from Tomson in
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