Jaime Pena and Verna Ann Pena - Page 4




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                                       OPINION                                        
               In their petition, petitioners allege that the deficiency in           
          this case is based upon respondent’s “determination that                    
          petitioners could not take ordinary losses, in the year of                  
          distribution of all of the proceeds, on stock previously held in            
          an exempt employees trust.”  Petitioners are mistaken on this               
          point.  As noted above, the deficiency in this case is based, in            
          large part, upon respondent’s determination that the IRA                    
          distributions received by petitioner in 1996 are includable in              
          petitioners’ income for that year.                                          
               Elsewhere in the petition, petitioners allege that during              
          1996 “the stock was sold at prices below what had been paid for             
          it by the trust” and that the proceeds of the sale “were                    
          distributed to petitioners and nothing was left in the trust”.              
          According to the petition, the “aggregate of the proceeds was               
          less than what had been contributed by the employer into the                
          trust”.  In their brief, petitioners argue that “investment                 
          losses were incurred by the plan” and therefore they “duly                  
          listed, on Schedule D, their investment losses exceeding gains              
          incurred by the plan in 1996".                                              
               The allegations contained in the petition and the argument             
          presented in petitioners’ brief relate only to whether                      
          petitioners are entitled to a deduction for investment losses               
          sustained by the plan; none of their allegations or arguments               





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