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transaction, Merrill Lynch agreed not to charge commissions, but
required that petitioner deposit sufficient funds or stock "to
immediately pay for the purchase of 96,600 shares." The record
further indicates that petitioner accepted Merrill Lynch's offer,
and, as previously stated above, deposited cash with Merrill
Lynch prior to the December 28, 1989, purchase of 96,600 shares.
While petitioners focus on the misunderstanding between
petitioner and Merrill Lynch on January 3, 1989, it is the sale
of the 96,600 share portion of the 100,000 shares of WalMart
stock that they are attempting to rescind. In this attempt, they
have confused Merrill Lynch with the actual purchasers of the
stock. Merrill Lynch was merely the seller's agent.
Rev. Rul. 80-58, supra, discusses the income tax
consequences of a rescission between a buyer and a seller. For
the rescission to be effective, both buyer and seller must be put
back in their original positions. Rev. Rul. 80-58, supra, 1980-1
C.B. 181, 181. In their brief, petitioners address only the
relationship between themselves and Merrill Lynch. However, the
buyer and the seller in the instant case are the January 3
purchasers of the WalMart stock and the petitioners,
respectively, not Merrill Lynch and petitioners. As noted above,
Merrill Lynch acted merely as an agent.3
3 There is not here involved any issue as to Merrill
Lynch's liability as an agent. Accordingly, we need not address
that subject here. However, even if petitioners could establish
that Merrill Lynch was liable to petitioners, see Restatement,
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