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respectively.1 The deficiency arose from respondent’s
determination that the distribution to petitioner2 of two
condominium units by Wood Street Apartments, Inc. (WSAI) was a
dividend.
We hold that petitioner received the condominium units as a
distribution in de facto liquidation of his shares of WSAI,
thereby reducing his realized gain by the amount of his basis in
the shares and by the amount of certain liabilities to third
parties that he assumed, resulting in a lesser deficiency than
respondent determined. We also hold petitioner liable for the
additions to tax for negligence under section 6653 and
substantial understatement under section 6661, computed on the
reduced deficiency.
FINDINGS OF FACT
Some of the facts have been stipulated, and are so found.
The stipulation of facts and attached exhibits are incorporated
herein.
When petitioners filed their petition, they resided in
Willoughby Hills, Ohio.
1Unless otherwise identified, section references are to the
Internal Revenue Code in effect for 1988, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
2Janet Mae Rendina has an interest in this case solely by
virtue of having filed a joint 1988 Federal income tax return
with her husband. Accordingly, all references to “petitioner”
in the singular are to Paul A. Rendina.
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