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income tax (tax) return for each of those years.
Ms. Read did not report any income with respect to her
transfer of MMP stock to MMP, except for the interest payments
under the installment promissory note that MMP made to her during
1988, 1989, and 1990. She reported those interest payments as
interest income in her tax returns for those years.
Mr. Read did not report in his tax returns for 1988, 1989,
and 1990 any income with respect to Ms. Read’s February 5, 1986
transfer of MMP stock.
Respondent determined in the notice issued to Ms. Read for
1989 and 19905 that the principal payment under the installment
promissory note that MMP made to her during each of those years
constitutes long-term capital gain.6 Respondent made no determi-
nations in that notice with respect to the interest payments
under the installment promissory note that Ms. Read reported as
interest income in her returns for those years.
Respondent determined in the notice issued to Mr. Read for
1988, 1989, and 1990 that the principal and interest payments
under the installment promissory note that MMP made to Ms. Read
during those years are constructive dividends to Mr. Read.
Respondent determined in the notice issued to MMP for 1988,
5The notice issued to Ms. Read did not relate to Ms. Read's
taxable year 1988.
6The parties stipulated that Ms. Read's basis in the MMP
stock that she owned was zero.
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