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The trial record is not complete with regard to Khalaf’s
capital investment in Al Zuni. No stock record book or canceled
checks were offered into evidence that provide verification of
Khalaf’s basis in his shares of stock in Al Zuni. In evidence,
however, are copies of Al Zuni’s corporate Federal income tax
returns for 1983 and later years in which Khalaf’s capital
investment in his shares of stock in Al Zuni is consistently
reflected as $486,000.
Based on the limited evidence before us on this issue and in
light of Khalaf’s testimony and the invested capital reflected on
Al Zuni’s corporate Federal income tax returns, we conclude that
on September 15, 1992, Khalaf’s cost basis in his shares of stock
in Al Zuni was $486,000, and we conclude that Khalaf realized no
capital gain income on the distribution from Al Zuni to him of
Al Zuni's jewelry inventory.
Decisions will be entered
under Rule 155.
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Last modified: May 25, 2011