- 7 -
C. Whether Section 752(a) Applies
Petitioners contend that, under section 752(a) and the
regulations thereunder, petitioner’s basis is increased by the
amount of the Green Valley debt that he guaranteed.5 Petitioners
acknowledge that Green Valley is an S corporation, and contend
that section 752(a) applies because S corporations are similar to
partnerships. We disagree because section 752(a) applies to
partnerships, not to S corporations. See, e.g., Smith v.
Commissioner, 84 T.C. 889, 909 (1985), affd. without published
opinion 805 F.2d 1073 (D.C. Cir. 1986).
D. Whether Petitioner Made an Economic Outlay Before or During
1996-97
Petitioners contend that petitioner made an economic outlay
relating to Green Valley’s debts before or during 1996-97. We
disagree for reasons stated next.
4(...continued)
petitioners’ contentions that Selfe v. United States, supra, is
binding in cases appealable to the U.S. Court of Appeals for the
Ninth Circuit or that public policy considerations require
following Selfe in this Court.
5 Sec. 752(a) provides:
SEC. 752. TREATMENT OF CERTAIN LIABILITIES.
(a) Increase in Partner’s Liabilities.--Any increase in
a partner’s share of the liabilities of a partnership, or
any increase in a partner’s individual liabilities by reason
of the assumption by such partner of partnership
liabilities, shall be considered as a contribution of money
by such partner to the partnership.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011