Madeline Cook - Page 2

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          a resultant net operating loss carryforward to 1995 of $71,143)             
          for loans made to her son's business; and, (2) whether a                    
          substantial portion (67 percent) of the income derived by                   
          petitioner during 1994 and 1995 from the sale of the family                 
          business should be characterized as long-term capital gain                  
          pursuant to section 1231.1                                                  
               Some of the facts have been stipulated and are so found.               
          The facts stipulated by the parties are incorporated herein by              
          reference and are found as facts in the instant case.  Petitioner           
          resided in Litchfield, Connecticut, at the time she filed the               
          petition in the instant case.                                               
               Petitioner Madeline Cook and her late husband owned 51                 
          percent of the stock of a closely held S corporation named Cold             
          Springs Water and Cooler Co., Inc. (Cold Springs).  Alexander               
          Cook (petitioner's son) owned the other 49 percent of Cold                  
          Springs stock.  On April 29, 1991, all of the assets of Cold                
          Springs were sold to Puro Corporation of America, Inc. (Puro).              
          Pursuant to a sales agreement between Puro and Cold Springs, Puro           
          was to make installment payments to Cold Springs on the basis of            

          1    Unless otherwise noted, all section references are to the              
          Internal Revenue Code in effect for the years in issue and all              
          Rule references are to the Tax Court Rules of Practice and                  

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