Joseph D. & Elizabeth M. Dunne - Page 11
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Treatment or Administrative Adjustment Request, to their 1997
return stating that they were not reporting the income or losses
listed on the Schedule K-1 from FRC. They explained that Mr.
Dunne filed a shareholder complaint regarding several issues:
(1) That Mr. Dunne was a 50-percent shareholder of FRC but was
frozen out of dividend distributions in 1997; (2) that FRC did
not provide Mr. Dunne with certain information; (3) that Mr.
Dunne was disengaged from FRC’s books, records, and resolutions;
and (4) that FRC may have made an unequal distribution of income
earned in 1997 that could require a revocation of its S
On September 17, 1999, FRC filed a Form 1120S for 1998 and
attached Schedules K-1 for Mr. Dunne and Mr. Marcus. The
Schedules K-1 reported that Mr. Dunne owned 23.69863 percent of
the stock and Mr. Marcus owned the rest. In computing the
ownership percentages shown on the 1998 Schedules K-1, FRC’s
accountants assumed that Mr. Dunne and Mr. Marcus each owned 50
percent of FRC’s stock until June 22, 1998, and that Mr. Marcus
became the sole shareholder after that date. FRC reported a net
loss in 1998.
FRC sent Mr. Dunne a Schedule K-1 for 1998 identical to the
Schedule K-1 that it submitted to respondent. In response to
receiving his Schedule K-1 for 1998, on September 22, 1999, Mr.
Dunne faxed a letter to FRC’s accountants stating that the
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Last modified: March 27, 2008