R Ball for R Ball III by Appt v. Commissioner of IRS

OPINION OF THE COURT

VAN ANTWERPEN, Circuit Judge.

I. INTRODUCTION

An S corporation (“S Corp.”) is a small business corporation that is permitted to have its corporate income, losses, deductions, and credits attributed to its shareholders. This appeal arises out of nine consolidated cases before the United States Tax Court regarding the tax implications of an S Corp.’s election to treat its subsidiary as a “qualified subchapter S subsidiary” (“Qsub”) under Internal Revenue Code § 1361. 1 Specifically, the parties disagree as to whether the Qsub election and subsequent sale of the S Corp. parent…