CC&F Western Operations Limited Partnership, CC&F Investors, Inc., Tax Matters Partner - Page 10




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          the details of the transactions, did not recognize that                     
          substantial income was omitted.                                             
               Colony, Inc. v. Commissioner, supra, upon which petitioner             
          relies heavily, does not support petitioner’s arguments.  Colony            
          involved the interplay between "gross receipts" and "gross                  
          income”.  All of the receipts of a sale of real property had been           
          disclosed, but cost of goods sold had been overstated.  Under               
          these circumstances, the Supreme Court held that there was not an           
          omission from gross income within the meaning of the applicable             
          statute because, in computing the 25-percent threshold, Congress            
          intended omission of gross income to refer to an understatement             
          of amount realized rather than net gain.  See id. at 1038.                  
               Our holding is consistent with the decision of this Court in           
          Estate of Knox v. Commissioner, T.C. Memo. 1961-129, revd. on               
          another issue 323 F.2d 84 (5th Cir. 1963).  In Estate of Knox, a            
          corporation owning real property was liquidated, and the assets             
          were distributed to the shareholders.  Because an election was              
          not filed within 30 days after the adoption of the plan of                  
          liquidation, the distribution that was received by the                      
          shareholders should have been reported as income on their                   
          individual tax returns.  The taxpayer, a 60-percent shareholder,            
          failed to include the distribution in income.  The taxpayer                 
          failed to report that the corporation had been liquidated on her            
          income tax return but attached a schedule claiming that the                 





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