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Respondent’s Objections
Respondent has filed his notice of objection to the motion
(the notice).3 Respondent claims that the motion is premature,
insufficient as a matter of law, and fails to establish that
there is no genuine issue as to any material fact. In
particular, respondent claims that many of petitioner’s exhibits
constitute hearsay and are so unreliable that, without the
opportunity for formal discovery and cross-examination, the
documents should not be before the Court and the Court should not
rely upon them in ruling on the motion. Respondent claims that
there are genuine issues of material fact that must be resolved
with respect to each of the three issues for which petitioner
seeks summary adjudication.
Discussion
I. Built-In Gain Tax
Section 1374(a) imposes a corporate-level tax on the net
recognized built-in gain of an S corporation that has converted
from C corporation to S corporation status. The tax applies only
during the 10-year period beginning with the first taxable year
for which the corporation is an S corporation. See sec.
1374(d)(7). Built-in gain is measured by the appreciation in
value of any asset over its adjusted basis as of the time the
3 Petitioner has replied to the notice (the reply), and
respondent has responded to the reply (the response).
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Last modified: May 25, 2011