Dale H. Sundby and Edith Littlefield Sundby - Page 10

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          However, if a taxpayer chooses to conduct business through a                
          corporation and gains an advantage from its use, the taxpayer is            
          not permitted subsequently to deny the existence of the                     
          corporation for tax purposes.  Id.; Weigman v. Commissioner,                
               In general, any “small business corporation” may elect to be           
          an “S corporation” under section 1362(a)(1).  One of the effects            
          of electing S corporation status is that income earned by the               
          corporation is not taxed at the corporate level.  Sec. 1363(a).             
          However, taxable income is still computed at the corporate level.           
          Sec. 1363(b).  Accordingly, S corporations are required to file             
          yearly tax returns and to provide copies of the information on              
          those returns to its shareholders.  Sec. 6037(a) and (b).  The              
          individual shareholders, in turn, are required to either report             
          on their own returns all S corporation items consistently with              
          the corporate return or to file a statement identifying                     
          inconsistencies or noting that a corporate return was not filed.            
          Sec. 6037(c).  Thus, the corporate entity cannot be ignored, even           
          if the corporation has elected S corporation status.  Byrne v.              
          Commissioner, 45 T.C. 151, 157 (1965), affd. 361 F.2d 939 (7th              
          Cir. 1966); see also Weibusch v. Commissioner, 59 T.C. 777                  
          (1973), affd. 487 F.2d 515 (8th Cir. 1973).                                 
               Taxpayers are required to maintain records sufficient to               
          establish the amounts of income, deductions, and other items                

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