PhoebeRoberts
Level 11
Level 11

Yeah, that was definitely a bad facts case. If the Tax Court had ruled in the shareholder's favor, the statute would have already run on the corporate return, though, and "no one ever pays tax on that enormous chunk of money" is never going to be the ruling if there's an argument that gets it taxed. But the logic was that the taxpayer was entitled, under state law / the corporate organizing documents, to get an equal distribution.