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returns consistent with the tax information provided by
the Trust and the other plan entities in accordance
with the Closing Agreement between Drexel and the
Internal Revenue Service.
Petitioner was issued Forms W-2 reporting the 1992 and 1993
distributions as wages. Petitioners reported the distributions
as ordinary income on, respectively, their 1992 and 1993 Federal
income tax returns.
Petitioners’ 1989 and 1990 Federal Income Tax Returns
Petitioners’ 1989 and 1990 Federal income tax returns were
prepared by a return preparer.
On their 1989 return, petitioners reported a long-term
capital gain with respect to the sale of the shares in the amount
of $22,950, claiming an amount realized on the sale of $67,950
and a basis of $45,000. Petitioners did not mention the note on
the return. Because petitioner did not have adequate records
with respect to the shares, he incorrectly estimated the basis
claimed on the return. Petitioners did not elect to report the
sale of the shares on the installment method on their 1989
return.
On their 1990 Federal income tax return, petitioners
reported a long-term capital loss with respect to the note in the
amount of $29,945, claiming an amount realized of $166,361 and a
basis of $196,306.
On April 14, 1993, petitioners mailed to the IRS an amended
1989 Federal income tax return reporting a capital loss with
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Last modified: May 25, 2011