- 6 -
adjusting journal entry from Silver Glen to Marc. On the same
Schedule D, this $49,000 long-term capital gain was more than
offset by reported net long-term losses from partnerships, S
corporations, and fiduciaries in the amount of $230,976.
For 1997, petitioner reported (after factoring in various
other items not at issue here) a net operating loss (NOL) of
$311,976. Petitioner carried this NOL back to 1994 and filed a
Form 1045, Application for Tentative Refund, claiming a $123,543
overpayment for 1994. Pursuant to section 6411, respondent made
a tentative allowance of the 1994 claimed overpayment.
Notice of Deficiency
By notice of deficiency, respondent disallowed petitioner’s
claim to the $792,752 Marc carryover loss, on the ground that it
exceeded petitioner’s basis in Marc stock and debt for 1997. As
a consequence, petitioner’s 1997 income was increased by
$792,752, wiping out petitioner’s NOL carryback to 1994.
Accordingly, respondent recaptured the $123,543 tentative
allowance of petitioner’s 1994 claimed overpayment and increased
petitioner’s 1994 tax by the same amount.
Discussion
I. General Legal Principles
Generally, an S corporation shareholder determines his or
her tax liability by taking into account a pro rata share of the
S corporation’s income, losses, deductions, and credits. Sec.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011