BROWN v. COMMISSION OF INTERNAL REVENUE
United States Tax Court
Petitioners were shareholders of a subchapter S corporation. Petitioners guaranteed A's loan to the corporation. Petitioners never paid any amounts on the loan. The corporation suffered net operating losses. Held: petitioners' bases in their investments in the subchapter S corporation are not increased by A's loan to the corporation or by petitioners' guarantees; net operating loss pass-through deductions are disallowed.
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Petitioners were shareholders of a subchapter S corporation. Petitioners guaranteed A's loan to the corporation. Petitioners never paid any amounts on the loan. The corporation suffered net operating losses. Held: petitioners' bases in their investments in the subchapter S corporation are not increased by A's loan to the corporation or by petitioners' guarantees; net operating loss pass-through deductions are disallowed. Sec. 1374(c)(2), I.R.C. 1954. Petitioners borrowed $ 130,000 from B and lent $ 100,000 of the proceeds to their subchapter S corporation. The corporation gave petitioners no…
1Opinion of the Court
FREDERICK G. BROWN, NINA V. BROWN, MICHAEL ILITCH, MARIAN ILITCH, RICHARD G. SAUER, L. ELAINE SAUER, THOMAS P. CASEY, DOLORES A. CASEY, RONALD D. PRIEBE and RETA L. PRIEBE, Petitioners v. COMMISSION OF INTERNAL REVENUE, Respondent
BROWN v. COMMISSION OF INTERNAL REVENUE
Docket No. 5297-76.
United States Tax Court
T.C. Memo 1981-608; 1981 Tax Ct. Memo LEXIS 142; 42 T.C.M. (CCH) 1460;
October 19, 1981.
Petitioners were shareholders of a subchapter S corporation. Petitioners guaranteed A's loan to the corporation. Petitioners never paid any amounts on the loan. The corporation suffered net operating…
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