- 6 - The taxpayer in Selfe borrowed funds in her individual capacity and pledged her personal assets as collateral. Id. at 770. She later formed an S corporation and advanced the borrowed funds to the corporation. Id. The taxpayer’s loan was converted into a loan to the corporation. The corporation assumed the liability for repayment of the loan, and the taxpayer guaranteed repayment if the corporation did not repay. The taxpayer’s personal assets continued to be collateral for the corporate liability. Id. at 771. The U.S. Court of Appeals for the Eleventh Circuit held that shareholder guaranties of subchapter S corporate indebtedness increase the shareholder's tax basis in his or her stock in the corporation where, in substance, the shareholder borrowed funds and advanced them to the corporation.3 Id. Unlike Selfe, there is no evidence in this case that petitioner personally borrowed funds and then advanced those funds to Green Valley or that he pledged personal assets as collateral or that creditors of Green Valley looked primarily to him for repayment. We conclude that Selfe v. United States, supra, is distinguishable and does not control this case.4 3 Because material facts in Selfe v. United States, 778 F.2d 769 (11th Cir. 1985), remained in dispute, the U.S. Court of Appeals for the Eleventh Circuit remanded the case to the trial court to evaluate whether the loan from the bank should be treated in reality as a loan to the taxpayer and then to the S corporation. 4 Because Selfe does not control here, we need not decide (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
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