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All section references are to the Internal Revenue Code in
effect for the taxable year in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated. All dollar amounts are rounded to the
nearest dollar, unless otherwise indicated.
After concessions, the issues for decision are: (1) Whether
the basis of certain shares of stock petitioners received from
their grandfather in 1987 was the fair market value on the dates
the transfers occurred. This turns on whether the transfers were
gifts. We hold petitioners' basis is not the fair market value
of the shares but the transferred basis of the grandfather. (2)
Whether for 1990 petitioners are entitled to claimed deductions
for investment interest relating to certain shares of stock
received from their grandfather in 1987. We hold they are not.
(3) Whether for 1990 petitioners are liable for an addition to
tax pursuant to section 6651(a)(1). We hold they are.
Some of the facts have been stipulated and are so found.
The stipulated facts and the accompanying exhibits are
incorporated herein by this reference. Petitioners resided in
Tucson, Arizona, at the time the petition was filed.
General Background
Greg R. Vinikoor (petitioner) married Melissa Vinikoor (Mrs.
Vinikoor) on March 21, 1987. Roy Drachman (Drachman) is Mrs.
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