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value of the jewelry inventory transferred from Al Zuni to Khalaf
produces income to Al Zuni of $133,413.
Petitioners contend that certain checks totaling $133,000
written during 1992 by Khalaf on Al Zuni’s bank account in favor
of Khalaf, Khalaf’s daughter and son, and cash should be treated
as additional purchases of jewelry on behalf of Al Zuni, and
should be treated as increasing Al Zuni’s cost basis in the
jewelry inventory by at least $133,000 and as eliminating
essentially all gain on the transfer of the jewelry inventory to
Khalaf. No credible evidence indicates that these checks
constitute purchases of jewelry inventory. Petitioners' attempt
to violate the stipulation of facts as to Al Zuni’s cost basis in
the jewelry inventory is rejected.
We sustain respondent’s adjustment charging Al Zuni with
income in the amount of $133,413 with regard to the September 15,
1992, transfer of jewelry inventory from Al Zuni to Khalaf.
Capital Gain Income of $474,903 Charged to Khalaf
Section 331 provides that amounts received by shareholders
in liquidation of a corporation shall be treated as full payment
in exchange for the shareholders' shares of stock in the
corporation. Under section 1001, a gain or loss realized by
shareholders upon receipt of property in complete liquidation of
a corporation is determined by comparing the value of the
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