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MEMORANDUM OPINION
COHEN, Chief Judge: In Winn v. Commissioner, T.C. Memo.
1997-286, we concluded that respondent's motions for summary
judgment should be denied, and petitioners' cross-motions for
partial summary judgment should be granted. Thereafter,
respondent filed a motion for reconsideration. Released today is
the Opinion in Nelson v. Commissioner, 110 T.C. ___ (1998), in
which the Court decides the same legal issue, to wit, whether
discharge of indebtedness income to an S corporation increases a
shareholder's basis in the stock of the corporation, in favor of
respondent. The arguments discussed in Nelson were fully briefed
and argued in these cases. Under these circumstances,
respondent's motion for reconsideration will be granted. This
Memorandum Opinion replaces T.C. Memo. 1997-286, which is hereby
withdrawn.
Background
Respondent determined a deficiency of $242,555 in Philip D.
and Eleanor G. Winn's (the Winns) 1992 Federal income tax and a
deficiency of $251,192 in David A. and Louise A. Gitlitz's (the
Gitlitzes) 1991 Federal income tax. At the time their respective
petitions were filed, all petitioners resided in Colorado.
Philip D. Winn (Winn) and David A. Gitlitz (Gitlitz) were
shareholders in P.D.W. & A., Inc. (PDW&A), a Colorado
corporation. In 1991, PDW&A had an election in effect to be
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