T.C. Memo. 2006-78 UNITED STATES TAX COURT SID PAUL RUCKRIEGEL, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent AL A. RUCKRIEGEL, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket Nos. 21675-03, 21676-03. Filed April 18, 2006. Ps were each 50-percent shareholders in an S corporation that incurred ordinary losses before and during the years in question (1999 and 2000). They were also 50-percent partners in a partnership that advanced funds, both directly and indirectly (through Ps) to the S corporation in 1997-2000. The issue for decision is whether all or a portion of those advances resulted in loans from the partnership to Ps and from Ps to the S corporation, thereby providing Ps with sufficient bases in the S corporation, under sec. 1366(d)(1)(B), I.R.C., to permit each P to deduct his 50-percent share of that corporation’s ordinary losses for the years in question. Held: Only the partnership advances through Ps resulted in loans from the partnership to Ps and from Ps to the S corporation, and those advances provided Ps with sufficient bases in the S corporation to deductPage: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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