T.C. Memo. 2008-46
UNITED STATES TAX COURT
HUBERT ENTERPRISES, INCORPORATED, SUCCESSOR BY MERGER TO
HUBERT HOLDING COMPANY, Petitioner v. COMMISSIONER
OF INTERNAL REVENUE, Respondent*
Docket No. 16798-03. Filed February 28, 2008.
L is a limited liability company that purchased
equipment and partially financed its purchases using
recourse debt. L reports its operations for Federal
income tax purposes on the basis of a taxable year
ending July 31. On Mar. 28, 2001, L’s two members
amended L’s operating agreement to add a provision on
deficit capital account restoration. Under the
provision, stated as effective Jan. 1, 2000, any L
member with a deficit capital account following the
liquidation of its interest in L had to contribute to L
by the end of the taxable year, or if later within 90
days after the date of the liquidation, funds equal to
the amount of the deficit for payment to L’s creditors
or for distribution to the members of L with positive
* This opinion supplements Hubert Enters., Inc. & Subs. v.
Commissioner, 125 T.C. 72 (2005), affd. in part, vacated in part
and remanded 230 Fed. Appx. 526 (6th Cir. 2007).
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Last modified: March 27, 2008