§1372 — Partnership rules to apply for fringe benefit purposes

91 cases·25 followed·16 distinguished·2 overruled·48 cited—27% support

Statute Text — 26 U.S.C. §1372

(a)General rule

For purposes of applying the provisions of this subtitle which relate to employee fringe benefits—

(1)

the S corporation shall be treated as a partnership, and

(2)

any 2-percent shareholder of the S corporation shall be treated as a partner of such partnership.

(b)2-percent shareholder defined

For purposes of this section, the term “2-percent shareholder” means any person who owns (or is considered as owning within the meaning of section 318) on any day during the taxable year of the S corporation more than 2 percent of the outstanding stock of such corporation or stock possessing more than 2 percent of the total combined voting power of all stock of such corporation.

91 Citing Cases

DIST. Ruben De Los Santos & Martha De Los Santos, Petitioners 156 T.C. No. 9 · 2021

Petitioners offer no plausible - 26 - explanation why the death benefits they received under the Legacy Plan, unlike all other employer-provided insurance benefits, should be excluded from “fringe benefits” that are subject to this rule.7 Besides pointing us to the correct technical analysis, section 1372 confirms the error of petitioners’ reliance on section 1.301-1(q), Income Tax Regs.

FOLLOWED James Clement Powell & Lucy Hamrick Powell, Petitioners · 2014

Section 1372 provides that, for purposes of applying the income tax provisions ofthe Code relating to employee fringe benefits, an S corporation shall be treated as a partnership and any person who is a "2-percent shareholder" ofthe S corporation shall be treated as a partner ofa partnership.

Veterinary Surgical Consultants, P.C., Petitioner T.C. Memo. 2003-48 · 2003

We likewise reject as not germane to the question before us petitioner’s reliance on section 1372, addressing fringe benefits under subtitle A, and the reference to that statute in Durando v.

Mike J. Graham Trucking, Inc., Petitioner T.C. Memo. 2003-49 · 2003

We likewise reject as not germane to the question before us petitioner’s reliance on section 1372, addressing fringe benefits under subtitle A, and the reference to that statute in Durando v.

Superior Proside, Inc., Petitioner T.C. Memo. 2003-50 · 2003

We likewise reject as not germane to the question before us petitioner's reliance on section 1372, addressing fringe benefits under subtitle A, and the reference to that statute in Durando v.

Nu-Look Design, Inc., Petitioner T.C. Memo. 2003-52 · 2003

We likewise reject as not germane to the question before us petitioner’s reliance on section 1372, addressing fringe benefits under subtitle A, and the reference to that statute in Durando v.

Water-Pure Systems, Inc., Petitioner T.C. Memo. 2003-53 · 2003

We likewise reject as not germane to the question before us petitioner’s reliance on section 1372, addressing fringe benefits under subtitle A, and the reference to that statute in Durando v.

Specialty Transport & Delivery Services, Inc., Petitioner T.C. Memo. 2003-51 · 2003

We likewise reject as not germane to the question before us petitioner’s reliance on section 1372, addressing fringe benefits under subtitle A, and the reference to that statute in Durando v.

Richard E. & Mary Ann Hurst, Petitioner 124 T.C. No. 2 · 2005

P-wife is a “2-percent shareholder” under section 1372, I.R.C., because the rules of section 318, I.R.C., attribute to her the ownership of the H Corp.

James Clement Powell & Lucy Hamrick Powell, Petitioners · 2016

Commissioner, at *13; Rev. Rul. 91- 26, supra. In the instant case, respondent contends that petitioners did not provide any evidence beyond self-serving testimonythat any expense had actually been paid. However, we have found petitioner husband to be a reliable witness, and the reliability ofhis records and testimony is bolste

Hurst v. Commissioner 124 T.C. 16 · 2005

The Hursts are correct, however, that section 1372 gives Mrs.

Robert P. Sweet & Dawnielle K. Lawson, Petitioners · 2004

They fail, however, - 13 - to place enough emphasis on the "making the property available for use by customers" language qualifying "in connection with." Legislative history of section 469 suggests that "section 1372(e)(5) (as in effect prior to the Subchapter S Revision Act of 1982) is relevant" in determining whether significant services are performed in connection with furnishing property.

Veterinary Surgical Consultants, P.C., Petitioner 117 T.C. No. 14 · 2001

Citing section 1372, the court specifically noted that “S corporations can establish retirement plans for their employees, including those who are also shareholders” and that shareholders 3 Keogh plans are retirement plans for self-employed individuals. A self-employed individual can deduct contributions to a qualified retirement plan up to a limit of 15

Veterinary Surgical Consultants, P.C. v. Commissioner 117 T.C. 141 · 2001

Citing section 1372, the court specifically noted that “S corporations can establish retirement plans for their employees, including those who are also shareholders” and that shareholders “who provide services to an S corporation can be treated like employees and covered by that corporation’s retirement plan.” Durando v. United States, supra at 551. In su

George Johnson, Jr., Petitioner T.C. Memo. 1997-558 · 1997

1372(c), as in effect for 1976, provides as follows: An election under subsection (a) may be made by a small business corporation for any taxable year at any time during the first month of such taxable year, or at any (continued...) - 15 - year was the period from October 25 through November 24, the day before Thanksgiving.7 Thus, the electio

Estate of Kirk v. Commissioner 70 T.C. 771 · 1978

Hoffman v. Commissioner 47 T.C. 218 · 1966

Zinniel v. Commissioner 89 T.C. 357 · 1987

Haley Bros. Construction Corp. v. Commissioner 87 T.C. 498 · 1986

Ourisman v. Commissioner 82 T.C. 171 · 1984

Opine Timber Co. v. Commissioner 64 T.C. 700 · 1975

Marshall v. Commissioner 60 T.C. 242 · 1973

Zychinski v. Commissioner 60 T.C. 950 · 1973

Howell v. Commissioner 57 T.C. 546 · 1972

Osborne v. Commissioner 55 T.C. 329 · 1970

Forrester v. Commissioner 49 T.C. 499 · 1968

Perlin v. Commissioner 86 T.C. 388 · 1986

Burbage v. Commissioner 82 T.C. 546 · 1984

T. J. Henry Associates, Inc. v. Commissioner 80 T.C. 886 · 1983

American Nurseryman Publishing Co. v. Commissioner 75 T.C. 271 · 1980

Thompson v. Commissioner 73 T.C. 878 · 1980

Llewellyn v. Commissioner 70 T.C. 370 · 1978

Greene v. Commissioner 70 T.C. 534 · 1978

Winn v. Commissioner 67 T.C. 499 · 1976

Bell Fibre Products Corp. v. Commissioner 65 T.C. 753 · 1976

Brutsche v. Commissioner 65 T.C. 1034 · 1976

Clairmont v. Commissioner 64 T.C. 1130 · 1975

Hicks Nurseries, Inc. v. Commissioner 62 T.C. 138 · 1974

Beirne v. Commissioner 61 T.C. 268 · 1973

Parker Oil Co. v. Commissioner 58 T.C. 985 · 1972

Pacific Coast Music Jobbers, Inc. v. Commissioner 55 T.C. 866 · 1971

Buhler Mortgage Co. v. Commissioner 51 T.C. 971 · 1969

Bramlette Building Corp. v. Commissioner 52 T.C. 200 · 1969

Lansing Broadcasting Co. v. Commissioner 52 T.C. 299 · 1969

Kean v. Commissioner 51 T.C. 337 · 1968

Dinkins v. Commissioner 45 T.C. 593 · 1966

Old Virginia Brick Co. v. Commissioner 44 T.C. 724 · 1965

Joyce v. Commissioner 42 T.C. 628 · 1964

Pestcoe v. Commissioner 40 T.C. 195 · 1963

Kin Sang Chan, Petitioner T.C. Memo. 2001-268 · 2001

Lewis v. Commissioner 90 T.C. 1044 · 1988

Freesen v. Commissioner 84 T.C. 920 · 1985

New Mexico Timber Co. v. Commissioner 84 T.C. 1290 · 1985

Crook v. Commissioner 80 T.C. 27 · 1983

E-B Grain Co. v. Commissioner 81 T.C. 70 · 1983

Tilford v. Commissioner 75 T.C. 134 · 1980

Lake Gerar Development Co. v. Commissioner 71 T.C. 887 · 1979

Davenport v. Commissioner 70 T.C. 922 · 1978

CHM Co. ex rel. McDougal v. Commissioner 68 T.C. 31 · 1977

Millar v. Commissioner 67 T.C. 656 · 1977

Sartori v. Commissioner 66 T.C. 680 · 1976

Thompson v. Commissioner 66 T.C. 737 · 1976

Tri-City Dr. Pepper Bottling Co. v. Commissioner 61 T.C. 508 · 1974

Columbia Iron & Metal Co. v. Commissioner 61 T.C. 5 · 1973

Arturovich v. Commissioner 61 T.C. 100 · 1973

Ross Glove Co. v. Commissioner 60 T.C. 569 · 1973

Clark v. Commissioner 58 T.C. 94 · 1972

Hook v. Commissioner 58 T.C. 267 · 1972

Estate of Meyer v. Commissioner 58 T.C. 311 · 1972

Prashker v. Commissioner 59 T.C. 172 · 1972

Blum v. Commissioner 59 T.C. 436 · 1972

Roesel v. Commissioner 56 T.C. 14 · 1971

Sieh v. Commissioner 56 T.C. 1386 · 1971

Stinnett v. Commissioner 54 T.C. 221 · 1970

Robinson v. Commissioner 54 T.C. 772 · 1970

Rafferty v. Commissioner 55 T.C. 490 · 1970

Rink v. Commissioner 51 T.C. 746 · 1969

Mitchell Offset Plate Service, Inc. v. Commissioner 53 T.C. 235 · 1969

Roubik v. Commissioner 53 T.C. 365 · 1969

Bone v. Commissioner 52 T.C. 913 · 1969

Feingold v. Commissioner 49 T.C. 461 · 1968

Perry v. Commissioner 49 T.C. 508 · 1968

Plowden v. Commissioner 48 T.C. 666 · 1967

Travis v. Commissioner 47 T.C. 502 · 1967

Pollack v. Commissioner 47 T.C. 92 · 1966

Feldman v. Commissioner 47 T.C. 329 · 1966

Levy v. Commissioner 46 T.C. 531 · 1966

Roschuni v. Commissioner 44 T.C. 80 · 1965

Byrne v. Commissioner 45 T.C. 151 · 1965

Frentz v. Commissioner 44 T.C. 485 · 1965

Sirius Solutions v. CIR · Cir.