Suriel v. Commissioner
United States Tax Court
P's wholly owned S corporation, V, claimed deductions for unpaid obligations, both principal and interest, owed into the Tobacco Master Settlement Agreement (MSA) fund, which is a qualified settlement fund under I.R.C. sec. 468B. R disallowed the deductions on the basis that economic performance did not occur until payment was actually made into the MSA fund, pursuant to sec. 1.468B-3(c)(1), Income Tax Regs.
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P's wholly owned S corporation, V, claimed deductions for unpaid obligations, both principal and interest, owed into the Tobacco Master Settlement Agreement (MSA) fund, which is a qualified settlement fund under I.R.C. sec. 468B. R disallowed the deductions on the basis that economic performance did not occur until payment was actually made into the MSA fund, pursuant to sec. 1.468B-3(c)(1), Income Tax Regs. Under I.R.C. sec. 1366 R made adjustments to P's individual income tax returns and determined deficiencies in P's income tax. Held: V is not entitled to deductions for unpaid MSA…
1Opinion of the Court
Goeke, Judge:
Respondent determined deficiencies in petitioner’s Federal income tax as follows:
Year Deficiency
$33,912,933 to o o ^
5,837,489 to o o <J>
Respondent’s determinations of tax deficiencies result from adjustments made following respondent’s examination of returns of Vibo Corp., d.b.a. General Tobacco, Inc. (Vibo), 1 an S corporation, because pursuant to section 1366 2 all of the deductions and losses of Vibo properly passed through to petitioner as the sole shareholder during each of the tax years in issue.
The issues in dispute concern Vibo’s accrual of unpaid obligations incurred…
2Cases cited17 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Indopco, Inc. v. CommissionerSupreme Court of the United States · 1992
- Wichita Term. El. Co. v. Commissioner of Int. R.Court of Appeals for the Tenth Circuit · 1947
- Fourco Glass Co. v. Transmirra Products Corp.Supreme Court of the United States · 1957
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3Cited by1 opinion
- Vidal Suriel v. CommissionerUnited States Tax Court · 2013