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Additional adjustments made in the statutory notice of deficiency
are computational in nature and will be resolved by our holding
herein.
Unless otherwise indicated, all section references are to
sections of the Internal Revenue Code in effect for the year at
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
Background
This case was submitted fully stipulated pursuant to Rule
122, and the facts are so found. The stipulations of the
parties, with accompanying exhibits, are incorporated herein by
this reference. At the time the petition was filed in this case,
petitioners resided in Enid, Oklahoma.
The primary dispute in this matter focuses on the proper
treatment for tax purposes of certain transactions involving
petitioner Gary D. Combrink and two related corporations, Cost
Oil Operating Company (COST) and Links Investment, Inc. (LINKS).
Mr. Combrink incorporated COST on January 7, 1983, and has at all
times owned 100 percent of the company’s stock. COST, a
subchapter C corporation, is engaged in the operation of working
interests in oil and gas wells. Mr. Combrink incorporated LINKS
on November 12, 1992, and has at all relevant times through
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