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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.
Background
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
Procedure.
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