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constitute gains from the sale or exchange of property under
section 301(c)(3)(A) because petitioners have failed to establish
the respective bases that Mr. Hawthorne had in the shares of
common stock which he owned in Centerior Energy and in Portland
General. Consequently, according to respondent, there is no
basis in any of those shares against which to apply the respec-
tive cash distributions at issue that he received from those
companies pursuant to section 301(c)(2). We agree with respon-
dent.4
Petitioners have not introduced any evidence regarding Mr.
Hawthorne's respective bases in the shares of common stock of
Centerior Energy and of Portland General which he owned and with
respect to which those companies made cash distributions to him
during 1993. On the record before us, we find that petitioners
have failed to satisfy their burden of establishing that $609.91
of the cash distributions totaling $1,440 that Mr. Hawthorne
received from Centerior Energy and all of the cash distributions
that he received from Portland General during 1993 are not
includible in petitioners' income for 1993. On that record, we
4 We note that the corrected copy of Form 1099-DIV which
Portland General sent to Mr. Hawthorne explained the tax
treatment of amounts that were identified in that form as "NON-
TAXABLE DISTRIBUTIONS", as follows:
This part of the distribution is nontaxable because it
is a return of your cost (or other basis). You must
reduce your cost (or other basis) by this amount for
figuring gain or loss when you sell your stock. But if
you get back all your cost (or other basis), you must
report future nontaxable distributions as capital
gains, even though this form shows them as nontaxable.
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