Estate of Eugene Brooks Kirk, Deceased Mary Ann Kirk, and Mary Ann Kirk v. Commissioner of Internal Revenue

This is an appeal of a decision of the United States Tax Court reported at 70 T.C. 771 (1978). The issues on appeal concern the proper application of the provisions of Subehapter S (Sections 1371-1379) of the Internal Revenue Code of 1954.

Music City Songcrafters, Inc. was incorporated under the laws of Tennessee on January 23, 1962. It adopted a fiscal year ending June 30. For its fiscal years ending June 30,1962 through 1970, Music City filed corporate income tax returns, Form 1120. Beginning July 1, 1970, Music City elected to be taxed as a small business corporation, pursuant to Sections…