123 T.C. No. 8
UNITED STATES TAX COURT
LAWRENCE G. WILLIAMS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 10314-02, 3262-03. Filed July 22, 2004.
P filed for bankruptcy on Dec. 3, 1990, at which
time he owned all of the shares of two S corporations.
Both S corporations sustained operating losses for
1990. P reported the pro rata portion of the 1990
losses attributable to the prebankruptcy period on his
individual tax return for 1990, resulting in a net
operating loss, which he carried forward through 2000.
P was discharged in bankruptcy in 1997. R disallowed
the losses and issued notices of deficiency for 1996-
2000.
1. Held: Where P, an individual S corporation
shareholder, filed for bankruptcy before the
corporation’s yearend, operating losses sustained by
the corporation during the year in which he filed for
bankruptcy are reported by the bankruptcy estate, not
P, because income or loss of an S corporation is
determined as of the last day of the corporation’s
taxable year.
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