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Bankruptcy and S corporation pass-through.

Publication: Journal of Accountancy
Publication Date: 01-NOV-03
Format: Online
Delivery: Immediate Online Access

Article Excerpt
Although there are some signs the economy is improving, many businesses continue to fail. Recently the Tax Court considered the effect of an S corporation's selling an asset while in bankruptcy. All S corporation shareholders contemplating filing for corporate bankruptcy need to consider the potential tax outcome of such a move.

Alphonse Mourad was the sole shareholder of V&M Management Inc., an S corporation. On January 8, 1996, the corporation filed a Chapter 11 bankruptcy reorganization petition. The court appointed an independent trustee to administer the reorganization. On September 26, 1997, the court approved the plan. The trustee...

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