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Neither buyer nor seller was put back into "the relative
positions that they would have occupied had no contract been
made." Id. at 181. The parties (petitioners and the IRS)
stipulated that the January 3 sales were made without condition.
The buyers never relinquished to petitioner the stock purchased
on January 3, 1989. Although petitioner purchased 96,600 shares
of WalMart stock in December 1989, he stipulated that those
shares were not the same shares of stock sold on January 3, 1989.
To facilitate the December 28 purchase, petitioner borrowed
$1,350,000 from his father. Petitioner did not owe any money to
his father for stock purchases prior to the January 3 sale.
Even if the parties involved are petitioners and Merrill
Lynch, as petitioners contend, the requirements of Rev. Rul. 80-
58, supra, have still not been satisfied. Before the end of
1989, petitioners submitted the rescission claim against Merrill
Lynch to arbitration. As an alternative to the unilateral
rescission theory, petitioners allege that this claim was the
equivalent of application to a court for a decree of rescission
because the agreement between petitioners and Merrill Lynch
contained an enforceable arbitration provision.
Agency 2 sec. 44 (1958) ("If an authorization is ambiguous
because of facts of which the agent has no notice, he has
authority to act in accordance with what he reasonably believes
to be the intent of the principal although this is contrary to
the principal's intent"), petitioners would be bound to the
January 3 buyers by the apparent authority Merrill Lynch
exercised on behalf of petitioners. See 3 Am. Jur. 2d, Agency,
secs. 71, 270 (1986).
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