- 11 -
determination. Petitioner has made no argument other than the collateral
estoppel argument discussed, supra.
Accordingly, we sustain respondent's determinations adjusted for her
concessions.
Issue 4. Capital Gain--1988
Respondent argues that petitioner realized capital gain income in 1988.
Petitioner argues that there was no capital gain transaction attributable to
the 295 shares of stock in TSI previously owned by petitioner.
Generally, cash basis taxpayers must include all items of income in the
gross income for the taxable year in which actually or constructively
received. Sec. 451(a); sec. 1.451-1(a), Income Tax Regs. "Income although
not actually reduced to a taxpayer's possession is constructively received by
him in the taxable year during which it is credited to his account, set apart
for him, or otherwise made available so that he may draw upon it at any time".
Sec. 1.451-2(a), Income Tax Regs. The sale of stock, other than stock in-
trade of the taxpayer, is the sale of a capital asset. Sec. 1221(1). And the
gain attributable to the sale of a capital asset results in capital gain
income. Sec. 1222. Moreover, the gain from the sale of property is equal to
the excess of the amount realized (i.e., the sum of any money received plus
the fair market value of the property received; sec. 1001(b)) from the sale,
over the taxpayer's adjusted basis in the property. Sec. 1001(a).
Respondent contends that as a result of the repurchase by TSI of its
stock from Gilbert in 1988 and in accordance with the Agreement and the prior
agreements entered into between petitioner and Gilbert, the proceeds from the
sale were payable to petitioner and therefore taxable as capital gain.
Petitioner contends that since a capital transaction did not occur, the
Agreement merely resulted in ordinary income to petitioner.11 Furthermore,
11
Although petitioner seems to be arguing that the character
of the income is ordinary rather than capital, the amount he
(continued...)
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