The case involves appellants
seeking a tax refund for taxes they had paid during a certain period of tax
years when they were shareholders of particular companies
2.How did the Court
decide the issue?
The appellants argument is flawed by the court
3.What was the Court's
reasoning for its decision?
argument is flawed because it assumes that distributive income from an S
corporation is nonbusiness income.
4.What were the facts
against the issue
This characterization ignores the true nature of the
income that appellants receive from their S corporations. Section 1366(b),
Title 26, U.S. Code indicates that the character of the item distributed to a shareholder
is to be determined as if the item were realized from the source from which the
corporation realized the item. Thus, business income generated by an S corporation
retains its status as business income as it passes through to the shareholders.
As business income, it is apportioned under R.C. 5747 1 for taxation in Ohio.
Thus, we reject appellants’ fourth proposition of law?
5.Do you agree with
the court's decision? Explain.
I agree with the court’s
decision because one of the appellants argument ignore that taxpayer’s income
tax liability is measured on the basis of taxpayer’s gross income
May 27th, 2015
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