$34,550, to reflect the correction of computational errors.
Petitioners do not contest such correction, and respondent has
conceded the penalty.
The sole issue for decision is whether section 267(a)
disallows petitioners a deduction for a capital loss from the
sale of a partnership interest by petitioner Barjona Meek
(hereinafter reference to Meek in the singular is to Barjona
Meek).
All the facts have been stipulated. The stipulation of
facts and attached exhibits are incorporated herein by this
reference.
At the time the petition was filed, petitioners resided in
Pagosa Springs, Colorado.
Immediately prior to the transactions which are the subject
matter of this case, Meek owned an 83-percent limited partnership
interest in Elgrade, Ltd., a California limited partnership
having an adjusted basis of $999,775.
On December 11, 1991, petitioners, along with Thomas
McCormick and Forrest Furman, executed an instrument entitled the
"Barjona S. Meek and Roberta L. Meek Grandchildren Irrevocable
Trust" (the trust document). The trust document was executed by
petitioners as "settlors" and by McCormick and Furman as
"trustees". McCormick and Furman are not related to petitioners
or the beneficiaries of the trust, by blood or marriage.
The trust document provides in part:
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