- 3 -
filed their petitions. G. Asher resided in Middlesboro,
Kentucky, at the time he filed his petition, and L. Asher resided
in Speedwell, Tennessee, at the time he filed his petition.
I. Increase in Basis of Four A Stock
During 1993, petitioners were shareholders of Four A, an S
corporation. Petitioners each held a 25-percent interest in Four
A.
During 1993, Four A had COD income of $1,289,048. On
December 3, 1993, Four A filed for bankruptcy and was insolvent
within the meaning of section 108(d)(3). On its Form 1120S for
1993, Four A excluded the COD income under section 108(a).
During that year, each petitioner increased his basis in his Four
A stock by $322,262--this represented his pro rata share of Four
A's COD income for the year.
II. Increased Section 1231 Loss
From May 1988 through February 1991, Four A mined coal which
it sold to Appolo. Four A ceased its mining operations in
February 1991, and it leased its mining equipment (the equipment)
to Black Mountain Coal Mining Co., Inc. (Black Mountain).
Pursuant to the lease with Black Mountain (the lease), Black
Mountain mined the coal seams formerly mined by Four A and sold
the coal to Appolo. Appolo paid Black Mountain a certain price
per ton for coal produced and paid Four A 50 cents per ton of
coal produced as a fee for Black Mountain's use of the equipment.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011