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Dealers as required by the cash management account agreement on
December 29, 1989. The arbitration claim was settled in October
1990. Merrill Lynch agreed to pay petitioners $250,000 but did
not admit any liability in making the January 3 sales of
petitioner's WalMart stock.
The 96,600 shares of Walmart stock purchased by Merrill
Lynch on behalf of petitioner and account no. 567-96135 on
December 28, 1989, were not the same shares of stock sold on
January 3, 1989. The number of purchased shares represented the
equivalent shareholder rights as the 96,600 shares sold on
January 3, 1989. The January 3, 1989, sales were to unrelated
third parties and the sales were without condition, other than
payment for the shares of stock. The January 3 purchasers of the
WalMart shares did not agree, at the time of sale, or at any
other time, that Merrill Lynch on behalf of the account or
petitioner could repurchase the shares.
Section 61(a)(3) includes in gross income "all income from
whatever source derived, including * * * Gains derived from
dealings in property". Section 1001(a) defines the amount of
gain from sale or other disposition of property as "the excess of
the amount realized therefrom over the adjusted basis". Section
1001(c) requires that "Except as otherwise provided in this
subtitle, the entire amount of the gain or loss * * * on the sale
or exchange of property shall be recognized." Petitioners do not
dispute that there was a sale of stock which gave rise to a
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