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In his motion to sever issue, filed on July 19, 1996,
respondent stated: "At this time, respondent is hopeful that the
proposed regulations will be finalized during the beginning of
the 1997 calendar year." On March 3, 1997, respondent filed a
status report, which indicated that the stock loss regulations
had not yet been finalized. On March 5, 1997, we ordered
respondent to file, on or before May 12, 1997, an additional
status report with respect to the finalization of these
regulations.
On March 13, 1997, petitioner filed a Motion for Court to
Decide Paty Loss Issue. In its motion, petitioner stated that on
the basis of respondent's March 3, 1997, status report, "it does
not appear that there is any specific date by which the proposed
regulations are targeted to be issued as a Treasury Decision."
Petitioner also argued that despite respondent's acknowledgment
that the adoption of the proposed regulations in their current
form would decide the Paty stock loss issue in petitioner's
favor, "Respondent continues to decline confessing error. The
only purpose for not doing so is to preserve the ability to
contest the Petitioner's treatment of the loss." Petitioner
maintained that "The prejudice is compounded by the fact that the
Petitioner has not only paid the full amount of the determined
deficiencies and interest thereon in the present case, it has
overpaid the deficiencies and interest based upon the settlement
of other issues." On April 29, 1997, respondent filed a Notice
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