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In Hope v. Commissioner, 55 T.C. 1020 (1971), affd. 471 F.2d
738 (3d Cir. 1973), the taxpayer sold his stock for $20 a share,
but later discovered that the stock at that time was trading for
over $50 a share on the market. Id. at 1026. In the year of the
sale, he filed a complaint for rescission against the agent and
the purchasers of the optioned stock. Id. The following year,
the parties settled the dispute. Id. at 1027. When his case
came before the Tax Court, the taxpayer argued that "his
complaint requesting a rescission of the sale postponed his
obligation to return the income from the sale until the year in
which the suit was settled." Id. at 1030. This Court disagreed,
holding that since the taxpayer had unfettered discretion to use
the funds when he received them, "the mere filing of the suit by
the petitioner was not of itself sufficient to postpone the
realization of gain on the completed sale." Id. at 1030-1031.
The Court also held that settlement of the suit was not the same
as rescission. Id.
Like the taxpayer in Hope, petitioners here had unhindered
control over the funds they received from the January 3, 1989,
sale. Although they brought proceedings for rescission, since
both the funds and the decision to seek a rescission were wholly
within their control, they have failed to demonstrate that a
rescission occurred which would postpone realization of the gain.
See Hope v. Commissioner, 471 F.2d 738, 742 (3d Cir. 1973).
Moreover, the settlement of petitioners' proceedings, which
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