Abdalla v. Commissioner
United States Tax Court
Held: Petitioner is entitled to a deduction for his pro rata share of two subch. S corporations' net operating losses. Because petitioner's stock basis and basis of indebtedness became worthless as of Oct. 26, 1966, his share of such losses is computed for that part of the corporations' taxable year ending Oct. 25, 1966. Held, further, interest payments made in connection with a bad debt are colored thereby, giving rise to a sec. 166 bad debt loss.
Read the full summary
Held: Petitioner is entitled to a deduction for his pro rata share of two subch. S corporations' net operating losses. Because petitioner's stock basis and basis of indebtedness became worthless as of Oct. 26, 1966, his share of such losses is computed for that part of the corporations' taxable year ending Oct. 25, 1966. Held, further, interest payments made in connection with a bad debt are colored thereby, giving rise to a sec. 166 bad debt loss. Held, further, petitioner's basis for the purpose of computing gain realized on the liquidation of two other corporations is not increased due to…
1DissentHall, J.
I respectfully dissent in respect to that portion of the majority’s opinion which holds that petitioner is entitled to deduct only a fraction (267/365) of the operating losses incurred by his two subchapter S corporations during the taxable years ending January 31,1967.
I would hold that as a result of the subchapter S elections, sections 1371-1377 preempt the field and allow the petitioner as a shareholder of the two subchapter S corporations ordinary deductions for the full amount of the corporations’ operating losses during their taxable years ended January 31,1967, to the extent of his…
2Cases cited5 opinions
- Boehm v. CommissionerSupreme Court of the United States · 1945
- Helvering v. William Flaccus Oak Leather Co.Supreme Court of the United States · 1941
- Christine L. Pounds as Independent of the Estate of Horace E. Pounds and Christine L. Pounds v. United StatesCourt of Appeals for the Fifth Circuit · 1967
- Mason v. CommissionerUnited States Tax Court · 1977
- Levy v. CommissionerUnited States Tax Court · 1966