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percent of the stock of North American Sports Management, Inc.
(NASM), an S corporation. Harriet Ginsburg, who is now deceased,
owned 100 percent of the stock of Family Affordable Partners,
Inc. (FAP), also an S corporation. NASM and FAP each owned 50
percent of the profits and losses and capital of UK Lotto, L.L.C.
(UK Lotto), a TEFRA partnership. NASM and FAP were not subject
to the S corporation TEFRA procedures, sections 6241-6245,
because they had fewer than five shareholders and had not
otherwise elected application of the unified procedures under
section 301.6241-1T(c)(2)(v), Temporary Proced. & Admin. Regs.,
52 Fed. Reg. 3003 (Jan. 30, 1987).2
Entity and Individual Returns
Form 1065, U.S. Partnership Return of Income, for UK Lotto
reflected a total ordinary loss of $7,351,237. Of that amount,
$6,936,038 was attributable to a loss reported on its Form 1065
from Pascal & Co., a partnership of which UK Lotto was a partner.
NASM and FAP each reported 50 percent of the total loss from UK
Lotto along with other items of income, deductions, gain, and
loss unrelated to UK Lotto in their respective Forms 1120S, U.S.
Income Tax Return for an S Corporation. NASM reported a total
ordinary loss from trade or business in 1995 of $4,087,725. FAP
2Sec. 301.6241-1T(c)(2)(v), Temporary Proced. & Admin. Regs.
was issued under former sec. 6241, which was repealed by the
Small Business Job Protection Act of 1996, Pub. L. 104-188, sec.
1307(c)(1), 110 Stat. 1781, effective for tax years beginning
after Dec. 31, 1996.
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