Henry P. and Darlene C. Brantley - Page 2

                                                  -2-                                                   
            consideration, and all Rule references are to the Tax Court Rules                           
            of Practice and Procedure.                                                                  
                  The substantive issue which gave rise to petitioners' motion                          
            involves the 1990 cancellation of a $228,000 note owed by Henry P.                          
            Brantley (petitioner) to Elite Coatings Company, Inc. (Elite), and                          
            whether such cancellation resulted in discharge of indebtedness                             
            income to petitioners pursuant to section 61(a)(12).  Respondent                            
            conceded this issue when this case was called for trial on March                            
            20, 1995, in Richmond, Virginia.                                                            
                  The parties have submitted affidavits and memoranda supporting                        
            their positions.  Neither party requested an evidentiary hearing.                           
            We decide the matter before us based on petitioners' Motion for                             
            Litigation and Administrative Costs, respondent's objection to                              
            petitioners' motion, petitioners' response and supplemental                                 
            response to respondent's objection, respondent's reply to                                   
            petitioners' response, and the affidavits and exhibits provided by                          
            the parties.  See Rule 232(a)(3).                                                           
                  Petitioners failed to present the facts surrounding the                               
            cancellation  of  Henry  P.  Brantley's  debt  to  Elite  in a                              
            comprehensive manner.  Nevertheless, we attempt to succinctly set                           
            forth below those pertinent facts (as we understand them) required                          
            to resolve the motion before us.  In doing so, we have simplified                           
            a complex series of events with regard to petitioner's acquisition                          
            of Elite stock and the ultimate cancellation of petitioner's debt                           
            to Elite in connection with such stock acquisition.                                         




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