- 22 -
concluding that they are equity rather than debt, we add them to
petitioner’s basis in his WSAI stock, rather than treating them
as liability offsets to the amount realized. We also look at
whether petitioner assumed, or took subject to, WSAI liabilities,
because the amount realized under section 1001 on the liquidation
exchange is the net value of the distribution, and that amount
must be reduced by the amount of liabilities assumed or taken
subject to. See Ford v. United States, 160 Ct. Cl. 417, 311 F.2d
951 (1963). We then subtract the basis of petitioner’s shares
from the amount realized on the distribution to compute his gain.
A. Value of Condominium Units Distributed
Respondent maintains that petitioner received a taxable
distribution of $135,800, or the value of the two condominium
units received.13 Petitioner maintains that he gave value
equivalent to that of the condominium units. Petitioner’s
position throughout this proceeding has been that the value of
the condominium units was no more than $109,200--the sum of what
he argues were the amount of the WSAI liabilities that he assumed
and his deposits into the WSAI account.
We disagree with petitioner’s estimate of the value of the
condominium units received. The average selling price of the
13Respondent makes her determination of the value of the
condominiums based on the $66,787 average price of the other 16
units sold, as well as the price petitioner received from the
sale of one of the units transferred to petitioner.
Page: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 NextLast modified: May 25, 2011