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Respondent determined a deficiency in petitioners' Federal
income tax for 1993 in the amount of $4,242.
After a concession by petitioners,2 the issue remaining for
decision is whether petitioners must include in gross income
original issue discount that accrued during 1993.
This case was submitted fully stipulated under Rule 122.
The stipulations of fact and attached exhibits are incorporated
herein by this reference. Petitioners resided in West Islip, New
York, on the date the petition was filed in this case.
Petitioners maintained a brokerage account with Bear,
Stearns Securities Corp. (Bear, Stearns) during 1993. Their
brokerage account holdings included original issue discount debt
instruments and stripped bonds. The record does not reveal the
issuance date of the debt instruments or the stripped bonds, or
the date on which they were acquired by petitioners.
Bear, Stearns issued a consolidated Form 1099-INT-DIV-MISC-
OID-1099B (Form 1099) that reported $14,847.50 of original issue
discount that had accrued on petitioners' holdings in 1993.
Petitioners failed to report the accrued original issue discount
on their 1993 joint Federal income tax return. Respondent issued
2 In their petition to the Court, petitioners failed to
address respondent's determination that they received and failed
to report dividend income in the amount of $16. We deem
petitioners to have conceded this issue. Rule 34(b)(4).
Respondent's adjustment to petitioners' miscellaneous itemized
deductions is computational and will be resolved by the Court's
holding on the issue in this case.
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Last modified: May 25, 2011