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of stock, which caused LPP to lose its S corporation
status.
William A. Pesnell, for petitioner.
Daniel N. Price, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
HALPERN, Judge: Respondent has determined a deficiency of
$165,366 in petitioner’s 1998 Federal income tax liability and an
addition to tax of $16,484 for that year on account of
petitioner’s failure to file her 1998 return on time. Petitioner
concedes the addition to tax and two of respondent’s adjustments
resulting in his determination of a deficiency. Putting aside a
computational adjustment that requires no decision by us, there
remain two issues for decision: (1) Whether, before 1998, by
creating a second class of stock, Long’s Preferred Products, Inc.
(LPP), lost its status as a pass-through entity (an S
corporation), thereby eliminating the requirement that petitioner
include her allocable share of LPP’s 1998 income in her 1998
income, and (2) whether the duty of consistency bars petitioner
from asserting that LPP lost its S corporation status before
1998. Because we decide the first issue in respondent’s favor,
we need not (and do not) address the second issue.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 1998, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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