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required to be shown on the return) prior to diminution by the
cost of such sales or services”.
For a taxpayer who owns an interest in a partnership or an S
corporation, gross income under section 6501(e)(1)(A)(i) includes
the taxpayer’s share of the entity’s reported gross income.
“[W]e have interpreted * * * [section 6501(e)(1)(A)(i)] as
requiring that a taxpayer’s gross income include her share of the
partnership’s gross receipts from the sale of goods or services.”
Hoffman v. Commissioner, supra at 148 (citing Harlan v.
Commissioner, supra); accord Estate of Klein v. Commissioner, 63
T.C. 585, 591 n.6 (1975), affd. 537 F.2d 701 (2d Cir. 1976)).
With respect to S corporations, section 1366(c) provides: “In
any case where it is necessary to determine the gross income of a
shareholder for purposes of this title, such gross income shall
include the shareholder’s pro rata share of the gross income of
the corporation.” When calculating reported gross income under
section 6501(e), taxpayers include their portion of an S
corporation’s gross income. Benderoff v. United States, 398 F.2d
132, 135 (8th Cir. 1968); Roschuni v. Commissioner, 44 T.C. 80,
85-86 (1965); Gmelin v. Commissioner, T.C. Memo. 1988-338, affd.
without published opinion 891 F.2d 280 (3d Cir. 1989).
Furthermore, section 6501(e)(1)(A)(ii) provides that any
amount disclosed in the return, or in a statement attached to the
return, shall not be considered as omitted gross income. These
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