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On November 23, 1987, Wilson-Davis sold 50,000 shares of NRG
on behalf of Mrs. Sparrow for $1,843. Petitioners received a
$1,843 check from Wilson-Davis dated December 1, 1987. The
$1,843 check was petitioners' proceeds and gain from the sale of
NRG, and it should have been included in their 1987 gross income.
Petitioners failed to include this $1,843 in their 1987 gross
income.
During taxable year 1988, Mr. Sparrow continued to sell
stocks and securities. On May 26, 1988, Mr. Sparrow entered into
a second written agreement with Mr. Slaziz to “exchange appraised
gemstones for [500,000 shares of Noble worth $125,000 and 660,823
shares of NRG worth $33,041].” Pursuant to this second
agreement, Mr. Sparrow and Mr. Slaziz exchanged the 1,160,823
shares of the above mentioned stock for gems valued at $158,154
by Mr. Slazis’ appraisal.
During 1988, Mr. Sparrow maintained a stock account at
Securities Settlement Corp. (Securities). On December 19, 1988,
Securities sold 403 shares of General Electric Company on behalf
of Mr. Sparrow for $18,257.
OPINION
Except with respect to respondent's allegation of fraud, the
burden of proof is on petitioners to prove that respondent's
determinations set forth in the notices of deficiency are wrong.
Rule 142(a) and (b); Welch v. Helvering, 290 U.S. 111, 115
(1933). Respondent must prove by clear and convincing evidence
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