- 9 -
shares equals $2,471.48 and the amount of gain realized from the
sale equals $3,643.31.5
Finally, we must decide the character of the gain which must
be recognized from the December 20, 1994, sale. The amount of
the gain attributable to the NUA in the 82 shares of stock at the
time of the distribution is treated as gain from a capital asset
held for more than 1 year. Sec. 1.402(a)-1(b)(1)(i), Income Tax
Regs.; see Rev. Rul. 81-122, 1981-1 C.B. 202; see also Notice 98-
24, 1998-17 I.R.B. 5. The amount of the gain which exceeds the
NUA at the time of distribution constitutes short-term capital
gain, since petitioner's post-distribution holding period was not
more than 1 year. Sec. 1.402(a)-1(b)(1)(i), Income Tax Regs.;
see Rev. Rul. 81-122, supra; see also Notice 98-24, supra.
Accordingly, we hold that petitioners must recognize long-term
capital gain in the amount of $3,530.10 and short-term capital
gain in the amount of $113.21 from petitioner's December 20,
1994, sale of Gillette common.
To reflect the foregoing,
Decision will be entered
under Rule 155.
5 This amount is calculated by subtracting the adjusted
basis of the 82 shares sold ($2,471.48) from the amount realized
from the sale ($6,114.79).
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