-2-
not. See Nelson v. Commissioner, 110 T.C. 114, 130 (1998), on
appeal (10th Cir., May 8, 1998).
Section references are to the Internal Revenue Code. Rule
references are to the Tax Court Rules of Practice and Procedure.
Background
The parties submitted this case fully stipulated under Rule
122.
A. Petitioners
Petitioners lived in Aspen, Colorado, when they filed the
petition in this case.
B. Mikama, Inc.
Petitioners were shareholders in Mikama, Inc. (Mikama), from
1988 to 1995. Mikama was an S corporation during the years in
issue. Petitioners owned a one-third interest in Mikama during
the years at issue.
1. Dove Canyon
From 1987 to 1995, Mikama was a general partner with a 10-
percent interest in a limited partnership known as Dove Canyon
Co. (Dove Canyon). Dove Canyon was formed in 1987 to develop 874
acres of real property in Orange County, California. After it
bought the land, Dove Canyon built the major improvements on the
property, including roads, a sewage system, a golf course, a
clubhouse, and a swim and tennis club, and sold parcels of the
development to builders to build homes on lots for sale to
individuals. Dove Canyon sold the last parcel in 1993.
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