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permanent loan's term. ME's closing costs of the renewal
promissory note included a loan commitment fee in the amount of
$5,000.
The parties modified and extended the original mortgage and
security agreement to have it serve as security for the renewal
promissory note. Anthony's personal guaranty was also extended
to cover the renewal promissory note.
Stock Basis
The first issue for decision is whether Eli and Peter are
entitled to increase their respective bases in the stock of REE
and TNE by the principal amounts of the loans from SouthTrust
Bank to REE and TNE which they personally guaranteed.
Respondent determined in the statutory notices of deficiency
that Peter's and Eli's distributions from TNE and REE exceeded
their adjusted bases in the stock of TNE and REE and that they
are required to recognize capital gain on the amounts of those
excesses.4
Respondent's determinations in the statutory notices of
deficiency are presumed to be correct, and petitioners bear the
4 As a result of the stipulations of the parties, the
amounts of the distributions received by Peter and Eli during
1992 are greater than the amounts determined by respondent. The
stipulations provide that Eli received distributions from REE in
the amount of $55,400 and Peter received distributions from TNE
in the amount of $119,397.42 during 1992. As stated above, we
incorporate such stipulations into our findings of fact and
herein instruct the parties to use such greater amounts of the
distributions in their Rule 155 computations.
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