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that, under section 1015, petitioner wife had no basis in the
lot.
Petitioners argue that under section 301, a distribution to
LoChirco was taxable to him at the lot's fair market value.
Revenue Agent Rizzardi used $10,000 as LoChirco's basis for the
lot, and concluded that LoChirco realized a constructive dividend
because Oliver Homes built petitioners' home on the lot.
Petitioners contend that petitioner wife's basis in the lot was
the amount Oliver Homes paid for it, namely $19,500, or, in the
alternative, the amount accepted by Agent Rizzardi in his audit
of the LoChircos, $10,000. Petitioners argue that their gain on
the sale of their home should be reduced accordingly.
Petitioners have not proven that LoChirco realized a
constructive dividend when Oliver Homes distributed the lot to
him. See Loftin & Woodard, Inc. v. United States, 577 F.2d 1206,
1242 (5th Cir. 1978); Goldstein v. Commissioner, 298 F.2d 562,
566 (9th Cir. 1962), affg. T.C. Memo. 1960-276; Melvin v.
Commissioner, 88 T.C. 63, 79-80 (1987), affd. per curiam 894 F.2d
1072 (9th Cir. 1990). Also, petitioners have not established the
fair market value of the lot when Oliver Homes distributed it to
LoChirco. Sec. 301(b). We hold that petitioner wife's basis in
the lot was zero.
4. Capital or Ordinary Income and Loss
Petitioners argue that the character of the gains and losses
from petitioner husband's sale of real estate in the years at
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