- 7 -
$430,679 as capital gain on their personal tax return.3
Petitioners did not include the $330,000 commission in their
income for the taxable year 1990.
Respondent disallowed the inclusion of the commission in
InTex's basis in the stock, thus increasing petitioners' capital
gain. Petitioners' return showed a tax of $59,689.00 whereas the
tax required to be shown on the return as determined by
respondent is $152,479.92.
OPINION
Inclusion of the Commission in Basis
The primary issue before us is whether the unpaid
commission, to which Mr. Haymond was apparently entitled, should
be taken into account in determining the basis of the Bonneville
Pacific stock sold in 1990 by Intex for purposes of calculating
Intex's capital gain required to be reported by petitioners on
their 1990 return.
Petitioners argue that including the commission in basis is
proper, because the commission is a capital expenditure related
to the stock and the gain on the stock must be recognized in the
year of the sale. Respondent does not dispute that the
commission is a capital expenditure or that gain must be reported
in the year of sale, but challenges the inclusion of the
3 The 1990 Form 1040 Schedule D only asked for the amount
of the net gain (loss) from S corporations.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011