-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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