Mun Li Fong - Page 12

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               (1) Under section 1312(7)(A) the relevant determination must           
               determine the basis of the property;                                   
               (2) Under section 1312(7)(A) there must be a transaction on            
               which such basis depends or a transaction which was                    
               erroneously treated as affecting such basis;                           
               (3) In respect of a transaction mentioned in (2) above,                
               there must have occurred one of the errors listed in section           
               1312(7)(C) (namely, the erroneous inclusion in or exclusion            
               from gross income, an erroneous recognition or                         
               nonrecognition of gain or loss, or an erroneous deduction of           
               an item properly chargeable to a taxpayer’s capital account            
               or an erroneous charge to a taxpayer’s capital account of an           
               item properly deductible).                                             
               (4) The error described in (3) above must have occurred with           
               respect to one of the taxpayers described in section                   
               1312(7)(B).                                                            

               As indicated, the narrow issue raised in petitioner’s motion           
          for summary judgment focuses on the first of the above                      
          requirements (namely, whether the settlement agreement and/or the           
          Court's decision entered on March 30, 1995, "determined the                 
          basis" of the properties as required by section 1312(7)(A)).                
               Generally, to constitute a determination under section                 
          1313(a), a court decision must involve a substantive decision on            
          the merits of a case.  See, for example, Commissioner v. Estate             
          of Weinreich, 316 F.2d 97, 103-104 (9th Cir. 1963), affg. in part           
          and revg. in part 37 T.C. 365 (1961), and Cotter v. Commissioner,           
          40 T.C. 506, 507-509 (1963), in which the courts rendered prior             
          affirmative opinions on the issue or on directly related issues,            
          which opinions were treated as final determinations under the               
          mitigation provisions.                                                      




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