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3. Other Factors
The parties failed to present evidence regarding which party
bore the risk of loss or damage to the equipment. Under the
agreement, Four A had a present obligation to convey title to
Black Mountain (as noted above), and Black Mountain had a present
obligation to make production payments to Four A in order to
retain the equipment. Additionally, Black Mountain had
possession of the equipment. Black Mountain was required to
return the equipment to Four A if it stopped making production
payments and failed to pay the remaining balance due under the
agreement.
4. Conclusion
Based on our review of the relevant Grodt & McKay Realty
factors, we conclude that the transaction concerning the
equipment constituted a sale by Four A.
B. Amount Realized From the Sale
On Four A's Form 1120S for 1993, Four A reported the amount
realized on the sale of the equipment as $445,000. In 1996, Four
A filed an amended Form 1120S that reported the amount realized
on the sale as $143,430. This increased Four A's section 1231
loss to $574,576. Petitioners filed Forms 1040X seeking refunds
for 1993 based on Four A's increased section 1231 loss.3
3 We note that petitioners never received any response from
respondent regarding their amended Forms 1040X and that this
(continued...)
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