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1244 stock in the amount of $32,500. Petitioners reported Bis as
the name of the corporation that issued the section 1244 stock.
Although petitioners reported that the stock was purchased with
cash, the number of shares issued to petitioners and the par
value per each share were not listed.
Section 61 provides that gross income means all income from
whatever source derived, including interest income. Sec.
61(a)(4). Petitioner contends that although the bank accounts
listed the names of both petitioners and their Social Security
numbers, they were held by petitioners for the benefit of their
children.
The record does not show that petitioners were not the
beneficial, as well as the legal, owners of these accounts. Thus
any interest earned from these accounts belongs to petitioners
and must be reported as interest income by petitioners. Sec.
61(a)(4).
Section 165(g)(1) and (2)(A) generally provides that a
taxpayer realizes a capital loss when stock that is a capital
asset becomes worthless. Section 1244(a) provides a limited
exception to this general rule in that it allows an individual
taxpayer to treat a loss on "section 1244 stock" as an ordinary
loss where it would otherwise be treated as a loss from the sale
or exchange of a capital asset. The aggregate amount of the loss
that may be treated as an ordinary loss under section 1244 cannot
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