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A court win for an S firm owner whose tax reporting did not match the K-1 he got from the company.

S corporation shareholders must report income and loss items on their 1040 consistent with what’s shown on the K-1 or attach a statement to the return identifying any inconsistencies. Form 8082 is used for this purpose.

Here, the owner of a bankrupt S firm disputed the bankruptcy trustee’s treatment of debt cancellation income on the 1120-S.

But he didn’t file the 8082 with his 1040. He instead attached a statement with amended forms and charts. This was enough for IRS to learn of the inconsistencies, according to the appeals court.

So the intent of the law won over the letter of the law.

Rubin, 9th Cir.

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