Paul G. Gubbini - Page 18

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          held that strict compliance with the requirements of section 1244           
          and the regulations issued pursuant to it is necessary to obtain            
          the benefits of the section.  Mogab v. Commissioner, 70 T.C. 208,           
          212 (1978); Morgan v. Commissioner, 46 T.C. 878, 889 (1966).                
               Petitioner contends that he received certain stock in Color            
          Trick that previously had been held by each of Leland Prentice              
          and his wife and/or Stanley Prentice and his wife in exchange for           
          repaying a $110,000 debt of Color Trick.6  Petitioner bases his             
          claim of a section 1244 loss on that transaction.  Petitioner,              
          however, has not established his basis in his Color Trick stock             
          for purposes of computing the amount of his loss pursuant to                


          5(...continued)                                                             
          the stock was acquired, the nature and amount of the                        
          consideration paid, and, if the stock was acquired in a                     
          nontaxable transaction in exchange for property other than money,           
          the type of property transferred, its fair market value on the              
          date of transfer to the corporation, and its adjusted basis on              
          that date.  Sec. 1.1244(e)-1(b)(1), (2), and (3), Income Tax                
          Regs., amended by T.D. 8594, 1995-1 C.B. 146.  Petitioner did not           
          file such an information report with his 1989 return.  In 1995,             
          however, the Commissioner eliminated the requirement of an                  
          information report, amending the regulation to require only that            
          taxpayers maintain adequate records to establish their                      
          entitlement to claim a loss pursuant to that section.  T.D. 8594,           
          1995-1 C.B. at 147; see also Notice 94-89, 1994-2 C.B. 560.  The            
          amendment is effective for all open taxable years beginning after           
          Dec. 31, 1953.  T.D. 8594, 1995-1 C.B. at 147.  Consequently,               
          petitioner’s failure to file an information report is not fatal             
          to his claim of entitlement to a loss pursuant to sec. 1244.                
          6                                                                           
               In view of the circumstances discussed below and our holding           
          that petitioner has not otherwise established his entitlement to            
          the benefits of sec. 1244, we need not address whether that stock           
          was "issued" to petitioner in the manner required by sec.                   
          1244(c)(1)(A).                                                              




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