Nelson v. Commissioner
United States Tax Court
Petitioner was the sole shareholder of M, an S corporation. In the 1991 taxable year, M was insolvent. In that year, M disposed of all of its assets and realized discharge of indebtedness income pursuant to sec. 61(a)(12), I.R.C. In accordance with sec. 108(a), I.R.C., M excluded from gross income the entire amount of the discharge of indebtedness income.
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Petitioner was the sole shareholder of M, an S corporation. In the 1991 taxable year, M was insolvent. In that year, M disposed of all of its assets and realized discharge of indebtedness income pursuant to sec. 61(a)(12), I.R.C. In accordance with sec. 108(a), I.R.C., M excluded from gross income the entire amount of the discharge of indebtedness income. Sec. 108(a), I.R.C., excludes from gross income, discharge of indebtedness income if, inter alia, the taxpayer is insolvent. In the same year, petitioner increased the basis of his stock in M. Later, petitioner disposed of the stock. In…
1Opinion of the Court
Hamblen, Judge:
Respondent determined a deficiency of $69,381 in petitioner’s 1991 Federal income tax. After concessions, the principal issue for decision is whether discharge of indebtedness income realized and excluded from gross income under section 108(a)1 passes through to shareholders of a subchapter S corporation as an item of income in accordance with section 1366(a)(1)(A) and, in turn, increases the basis of the corporate stock under section 1367.2
FINDINGS OF FACT
This case was submitted fully stipulated pursuant to Rule 122. The stipulation of facts is incorporated herein and found…
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3Cited by21 opinions
- Gitlitz v. CommissionerSupreme Court of the United States · 2001
- United States v. Harold D. Farley Gail D. FarleyCourt of Appeals for the Third Circuit · 2000
- Nelson v. CommissionerCourt of Appeals for the Tenth Circuit · 1999
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