- 4 -
shares of both corporations became property of his Estate at that
time.5 Both corporations are calendar year corporations.
Petitioner used a $4 million loan from Citibank to finance
the operation of Davidge.6 Davidge sustained an operating loss
of $3,385,592 during 1990. The Schedule K-1, Shareholder’s Share
of Income, Credits, Deductions, etc. (Schedule K-1), that Davidge
issued to petitioner for 1990 showed that $3,125,875 (or 92.33
percent) of the loss for 1990 was allocated to petitioner. This
amount represents the pro rata portion7 of Davidge’s loss
attributable to the period January 1 through December 3, 1990,
the date petitioner filed for bankruptcy. The remaining $259,717
(or 7.67 percent) of the loss for 1990 was allocated to the
Estate.
Kuma sustained an operating loss of $155,593 during 1990.
Similarly, the Schedule K-1 Kuma issued to petitioner for 1990
showed that $143,898 (or 92.33 percent) of the loss for 1990 was
allocated to petitioner. This amount represents the pro rata
portion of Kuma’s loss attributable to the period January 1
through December 3, 1990, the date petitioner filed for
bankruptcy. The remaining $11,955 (or 7.67 percent) of the loss
was allocated to the Estate.
5A debtor’s assets, with exceptions not applicable here,
become property of the bankruptcy estate when the debtor files
the bankruptcy petition. 11 U.S.C. sec. 541 (2000).
6The record does not reflect financing information for Kuma.
We assume that petitioner used portions of the Citibank loan to
finance the operation of Kuma as well.
7The pro rata portion is computed by assigning to each day
an equal share of the loss for the year. Sec. 1377(a)(1).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011