Richard L. Hutcheson and Deloris A. Hutcheson - Page 10

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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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