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date of transfer (October 19, 1990) made the transaction
self-correcting * * *. See Zabolotny v. Commissioner, 7 F.3d
774 (8th Cir. 1993)", affg. in part and revg. in part 97 T.C.
385 (1991). Respondent argues that petitioner never corrected
the transfer, and, to the extent that the Court of Appeals for
the Eighth Circuit held in Zabolotny that a transaction could
self-correct, this holding is wrong and should not be followed.
Respondent asserts that we should follow our opinion in
Zabolotny to the effect that a "correction" requires an
affirmative act that undoes the transfer.
Contrary to the parties' assertion, we do not believe that
our decision here is controlled by either opinion in Zabolotny.
The facts of that case are significantly different than the
facts at hand.5 In Zabolotny v. Commissioner, 97 T.C. 385
(1991), the taxpayers, after discovering oil on their farmland,
leased the mineral rights in the land. During the following
4-year period, the lease generated annual royalty income of
approximately $1 million to $1.5 million. On May 20, 1981,
approximately 4 years after the start of the lease, the
taxpayers sold their interest in the land, including the lease,
5 In fact, the Court of Appeals for the Eighth Circuit
explicitly recognized the uniqueness of the facts in Zabolotny,
stating: "The Zabolotnys have presented a highly unusual set of
circumstances, which are unlikely to appear in combination in a
single case". Zabolotny v. Commissioner, 7 F.3d at 774, 778 (8th
Cir. 1993), affg. in part and revg. in part 97 T.C. 385 (1991).
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