Prescott v. Commissioner
United States Tax Court
In 1954 petitioner elected to have his sole proprietorship taxed as a corporation under sec. 1361. Such election terminated by operation of law on Jan. 1, 1969. Held: 1. Petitioner is deemed to have received the assets of his business enterprise in a complete corporate liquidation on Jan. 1, 1969. 2. No portion of the gain realized on such liquidation is exempt from tax because of the character of the assets deemed distributed. 3. Petitioner has failed to carry his burden to…
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In 1954 petitioner elected to have his sole proprietorship taxed as a corporation under sec. 1361. Such election terminated by operation of law on Jan. 1, 1969. Held: 1. Petitioner is deemed to have received the assets of his business enterprise in a complete corporate liquidation on Jan. 1, 1969. 2. No portion of the gain realized on such liquidation is exempt from tax because of the character of the assets deemed distributed. 3. Petitioner has failed to carry his burden to show that he was not negligent in failing to report his income from the liquidation of his sec. 1361 corporation.
1Opinion of the Court
Irwin, Judge:
Respondent has determined a deficiency in petitioners’ Federal income tax for the calendar year 1969 in the amount of $108,051.78, plus an addition to tax under section 6653(a)1 of $5,402.59. Various concessions having been made, the issues remaining for our decision are whether the termination of section 1361 status pursuant to section 1361(n)(2) should be treated as a corporate liquidation under section 331, whether any portion of the gain on such liquidation (if found to exist) is exempt from taxation, and whether the section 6653(a) penalty is applicable.
FINDINGS OF FACT
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2Cases cited18 opinions
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Helvering v. HorstSupreme Court of the United States · 1940
- Pollock v. Farmers' Loan & Trust Co.Supreme Court of the United States · 1895
- Old Colony Railroad v. CommissionerSupreme Court of the United States · 1932
- Willcutts v. BunnSupreme Court of the United States · 1931
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3Cited by5 opinions
- Edward J. Prescott and Wanda D. Prescott v. Commissioner of Internal Revenue, L. W. Simpson and Shirley Simpson v. United StatesCourt of Appeals for the Eighth Circuit · 1977
- Conovitz v. Comm'rUnited States Tax Court · 1980
- Barrow v. Comm'rUnited States Tax Court · 2008
- Estate of Simkins v. CommissionerUnited States Tax Court · 1978
- Prescott v. CommissionerUnited States Tax Court · 1976