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consideration paid by the shareholder on the issuance of the
stock must be money or other property. Sec. 1244(c)(1).
Respondent does not challenge whether TIC was a "small business
corporation" for purposes of section 1244, but instead focuses on
the consideration petitioner provided for the TIC shares.
Petitioner stipulates that he did not contribute money or
other property to TIC in exchange for his shares of TIC stock.
Therefore, petitioner is not entitled to section 1244 treatment
for his original basis in the TIC stock. Petitioner did,
however, transfer thousands of dollars to Mr. Kelley, the
President of TIC, for the benefit of TIC. Although petitioner
did not receive any additional shares for his transfers to Mr.
Kelley, he argues that these transfers could be considered
capital contributions which would increase his basis in his
TIC/Multilogic stock. Petitioner's section 1244 stock loss
claimed on his return apparently included these transfers.
Section 1244 provides that the increase in basis resulting
from a contribution to capital "shall be treated as allocable to
stock which is not section 1244 stock." Sec. 1244(d)(1)(B).
This statutory rule applies to any increase in basis, however
effected. Bledsoe v. Commissioner, T.C. Memo. 1995-521.
Accordingly, petitioner is not entitled to section 1244 loss
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