Tax Court Rejects Taxpayer’s Argument That Disproportionate Distributions Terminated S Corporation Status
In order to avoid the flow-through of examination adjustments, the Taxpayer in Mowry v Commissioner[1] attempted to argue that an S corporation, in which he was a minority shareholder, had ceased to be a valid S Corporation. The Taxpayer argued that disproportionate distributions to the majority shareholder (i.e., not the Taxpayer) over several years created…