Leather v. Commissioner
United States Tax Court
62 T.C.M. 1087 (1991)
- Written by Eric Miller, JD
Facts
Helen Leather (plaintiff) incorporated her small business, Flexible Ink, Inc., with the help of her daughter, Leslee Hippert, a practicing attorney. Hippert suggested electing as an S corporation, to which Leather agreed. Hippert prepared the requisite document—a Form 2553, Election by a Small Business Corporation—which Leather signed. Hippert claimed to have sent the form to the Internal Revenue Service (IRS) from her law firm as part of her usual process for sending outgoing mail—placement in an envelope, placement at the receptionist’s desk, and so on—but the IRS never received it. Flexible Ink operated at a loss, which Leather attempted to claim on her individual income-tax return for three straight tax years, as would be proper for an S corporation. The IRS responded to each attempt by disallowing the claims and readjusting Leather’s taxable income. Leather eventually filed a new Form 2553, which was received and approved. Leather also filed suit against the Commissioner of Internal Revenue (the commissioner) (defendant) in the United States Tax Court, seeking a redetermination of taxable income for the three preceding years.
Rule of Law
Issue
Holding and Reasoning (Cohen, J.)
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