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her (the first Louisiana litigation),6 petitioner discovered an
audio tape of a purported 1986 LPP shareholders/directors meeting
attended by Julian E., Julian W., and Alma. Her attorney, who is
also her counsel in this case, after listening to the tape and
having it transcribed, advised her that the participants at the
meeting, by providing for a fixed level of distributions to
Julian E., had created a second class of stock in LPP, thereby
negating LPP’s S corporation status. Consistent with that
position, petitioner, on her 1998 Form 1040, U.S. Individual
Income Tax Return, which she filed on or about November 15, 1999,
omitted $229,292 of ordinary income and other pass-through items
reported on the Schedule K-1, Shareholder’s Share of Income,
Credits, Deductions, etc., issued by LPP to her for 1998.7 Along
with her 1998 return, petitioner submitted a Form 8082, Notice of
Inconsistent Treatment or Administrative Adjustment Request
(AAR), which purported to justify that omission on the basis that
the 1986 agreement created a second class of stock in LPP,
6 In an unpublished opinion, Minton v. Long’s Preferred
Prods., Inc., 829 So. 2d 669 (La. Ct. App. 2002), the court of
appeal held in petitioner’s favor in that litigation and
confirmed that she (1) purchased 19 shares of LPP stock in 1986
and (2) owned 50 shares (or 50 percent) of that stock as of 1996,
not 40.5 shares (or 40.5 percent) as had been alleged by Julian
E. and Julian W. and reported on the 1998 Schedule K-1,
Shareholder’s Share of Income, Credits, Deductions, etc., issued
to her by LPP.
7 Respondent’s adjustment for petitioner’s alleged omission
of LPP income is $283,077, based upon her ownership of 50 shares
of LPP stock, whereas the 1998 Schedule K-1 issued to her by LPP
reflects her ownership of only 40.5 shares, a position that was
subsequently rejected by the Louisiana Court of Appeal. See
supra note 6.
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