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(3) Amount in excess of basis.--
(A) * * * that portion of the
distribution which is not a dividend, to the
extent that it exceeds the adjusted basis of
the stock, shall be treated as gain from the
sale or exchange of property.
Contrary to petitioners' computation, nothing in these rules
allows a recipient shareholder to reduce his or her basis in debt
of the recipient C corporation to the shareholder by the amount
of the distribution. Cf. sec. 1367(b)(2) (provides for an
adjustment in the basis of any debt of an S corporation to a
shareholder). We decline petitioners' invitation to formulate
such a rule. To the extent that petitioners are impliedly
asserting that the $44,000 was a loan repayment as a factual
matter, such an assertion is contrary to our finding in the
original opinion that the sums in question were constructive
distributions in respect of petitioners' stock in the
corporation. Of course, Rule 155 is not a vehicle for
reconsideration of that finding. See Rule 155(c); see also
Bankers' Pocahontas Coal Co. v. Burnet, 287 U.S. 308 (1932);
Cloes v. Commissioner, 79 T.C. 933 (1982).
Accordingly,
Decision will be entered
in accordance with
respondent’s computation.
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Last modified: May 25, 2011