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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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