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dividends. To support their position that those distributions
are liquidating distributions, and not dividends, and that that
form is wrong, petitioners rely principally on a letter to
stockholders from Entergy, dated June 19, 1992. That letter
describes an agreement between Entergy and Gulf States to form a
holding company that would acquire all of the outstanding common
stock of Entergy and Gulf States and that would own all of the
common stock of Gulf States after the closing of the transaction.
The letter in question stated in pertinent part: "Each of the
share of GSU [Gulf States] preferred stock outstanding at closing
will continue as outstanding stock of GSU." Thus, the preferred
stockholders of Gulf States, including Mr. Hawthorne, remained as
such after the transaction described in that letter was closed
and were unaffected thereby. On the present record, we find that
petitioners have failed to show that the cash distributions that
Mr. Hawthorne received during 1992 from Gulf States are not
dividends.
Turning now to the respective cash distributions at issue
that Mr. Hawthorne received during 1993 from Centerior Energy and
from Portland General, which petitioners reported as dividend
income in their 1993 return and which they now claim are not
taxable, respondent does not dispute on brief that those distri-
butions do not constitute dividend income. However, respondent
disputes petitioners' position that those distributions are not
taxable. According to respondent, the respective cash distribu-
tions at issue from Centerior Energy and from Portland General
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