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Regs. We have 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); Gubbini v. Commissioner, T.C. Memo. 1996-
221.
Petitioner testified that he was orally promised stock in
Geotech as a result of the failures of the Rio Blanco lease and
Royalty. However, petitioner never received stock in Geotech.
In order to be entitled to the more favorable ordinary loss
treatment under section 1244, petitioner must first prove he had
an investment in stock, and secondly, that the small business
stock requirements pursuant to section 1244 have been satisfied.
4(...continued)
taxpayers claiming a loss pursuant to sec. 1244 to attach an
information report to the return in which the loss was claimed
showing the address of the corporation issuing the stock, the
manner in which 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. Petitioners did
not file such an information report with their 1991 Federal
income tax return. However, in 1995, 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 December 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.
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