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Accordingly, we hold that petitioners are not entitled to
deduct a net operating loss from SS&N in excess of their bases in
their stock as determined by respondent.
2. Whether Mr. Salem Realized Gain Upon Distribution of 300
Gulf Boulevard From Gulf Properties
Respondent's position is that during 1990 Mr. Salem realized
a capital gain distribution of $59,224 when Gulf Properties
transferred the title of 300 Gulf Boulevard to him. Whether gain
was realized depends upon the property's fair market value on
December 28, 1990, when Mr. Salem received it. Respondent
contends that its fair market value on that date was $600,000.
To the contrary, Mr. Salem contends that its fair market value
was no more than $540,000, thus resulting in no gain to him. The
Salems did not report any gain on their joint income tax return
for 1990 because Mr. Salem's basis in Gulf Properties ($9,876)
and the mortgage indebtedness he assumed ($530,900) totaled
$540,776, which he believed exceeded the property's fair market
value on the date of the distribution.
Petitioners' evidence on the issue of the fair market value
of the property consists of Mr. Salem's testimony and the report
of an expert, Ron Lozano. Respondent did not submit a report by
an expert but relies upon the purchase price paid for the
property by Gulf Properties in 1988 and values shown on the
Salems' tax returns and financial statements.
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