- 100 -
On the Schedule L attached to SLPC’s Form 1120S for 1995,
SLPC’s “Other current liabilities” were reported to be $2,208,733
as of the end of that year. Of that amount, SLPC reported that
$2,171,155 was “DUE TO AFFILIATE”. Also on this Schedule L,
SLPC’s “Loans from shareholders” were reported to equal
$1,219,000 as of the end of 1995. There were no amounts
separately identified as interest payments made and/or imputed by
SLPC to the Roses on its Form 1120S for 1995.
There were no amounts separately identified as interest
payments received and/or imputed by the Roses from SLPC on their
joint income tax return for 1995.
B. IRS Determinations
The IRS determined that the Roses could deduct the losses
that they reported from SLPC on their joint income tax returns
for 1994 and 1995 to the extent of the basis in their SLPC
interest. In calculating the Roses’ basis in their SLPC interest
for those years, the IRS determined that the $350,000 transaction
between TPC and SLPC in 1994 and the $800,000 transaction between
TPC and SLPC in 1995 did not constitute debt owed to the Roses
and did not increase the Roses’ basis in their SLPC interest.
The IRS determined that “there was not an actual economic outlay”
by the Roses and that “the debt was not directly attributable to”
the Roses.
Page: Previous 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 NextLast modified: May 25, 2011