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such stock. The Garber brothers’ parents, who are deceased,
never owned any of petitioner’s stock.
On or about July 10, 1996, petitioner underwent a
reorganization described in section 368(a)(1)(D) (the
reorganization). Pursuant to the reorganization, petitioner
canceled Charles’s original stock certificate for 3,492.85 shares
and issued a new certificate to him for 386 shares. As a result,
Charles’s percentage ownership of petitioner decreased from 68
percent to 19 percent, and Kenneth’s percentage ownership of
petitioner increased from 26 percent to 65 percent.2
On April 1, 1998, Kenneth sold all of his shares in
petitioner to Charles (the 1998 transaction). As a result of the
1998 transaction, Charles’s percentage ownership of petitioner
increased from 19 percent to 84 percent.
On its 1998 consolidated Federal income tax return,
petitioner claimed an NOL deduction in the amount of $808,935 for
regular tax purposes and $728,041 for alternative minimum tax
(AMT) purposes. As one of the adjustments giving rise to the
deficiencies here in question, respondent adjusted the amount of
petitioner’s 1998 NOL deduction, for both regular tax and AMT
purposes, to $121,258 pursuant to section 382(b). Petitioner
assigns error to that adjustment.
2 The parties provided no information regarding the
reorganization other than the fact of its occurrence and the
resulting changes in percentage ownership interests.
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