St. Charles Inv. Co. v. Commissioner
United States Tax Court
Prior to Jan. 1, 1991, X was a closely held C corporation, which incurred passive activity losses (PAL's) giving rise to suspended PAL's pursuant to sec. 469, I.R.C. A portion of the suspended PAL's was attributable to depreciation. X reduced the bases of the properties used in the passive activities by the amounts of such depreciation.
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Prior to Jan. 1, 1991, X was a closely held C corporation, which incurred passive activity losses (PAL's) giving rise to suspended PAL's pursuant to sec. 469, I.R.C. A portion of the suspended PAL's was attributable to depreciation. X reduced the bases of the properties used in the passive activities by the amounts of such depreciation. X elected S corporation status as of Jan. 1, 1991. During 1991, it disposed of several of the passive activities and calculated the gain (loss) from those dispositions using the bases of the properties involved as reduced by the depreciation. X used suspended…
1Opinion of the Court
OPINION
Tannenwald, Judge:
This case comes before us on cross-motions for partial summary judgment by the parties under Rule 121.1 The issues for decision are:(1) Whether suspended passive activity losses (pal’s) incurred by a closely held C corporation that later elects to be an S corporation may be deducted by the then S corporation in the year the corporation disposes of its entire interest in the activity generating the losses, and if not,(2) whether the basis of the assets used in the activity may be recomputed to restore amounts for portions of the suspended pal’s attributable to…
2Cases cited13 opinions
- Vimar Seguros Y Reaseguros, S. A. v. M/V Sky ReeferSupreme Court of the United States · 1995
- Thomas v. PerkinsSupreme Court of the United States · 1937
- Bulova Watch Co. v. United StatesSupreme Court of the United States · 1961
- Norfolk Southern Corp. v. CommissionerUnited States Tax Court · 1995
- Lenz v. CommissionerUnited States Tax Court · 1993
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3Cited by4 opinions
- Sidell v. CommissionerCourt of Appeals for the First Circuit · 2000
- Sidell v. CommissionerUnited States Tax Court · 1999
- St. Charles Inv. Co. v. CommissionerUnited States Tax Court · 1998
- St. Charles Investment Co., Burton C. Boothby, Tax Matters Person v. CommissionerUnited States Tax Court · 1998