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$166,831 for the stock redemption was based solely on the Form
1099 issued by CRC and therefore is entitled to no presumption of
correctness. Petitioners’ argument is without merit. This is
not a case where respondent determined a deficiency based solely
on an employer’s Form 1099. Rather, respondent’s agent
investigated the information that CRC reported on the Form 1099
and determined the extent to which it was supported by CRC’s
books and records, as summarized by CRC’s accountants. This
investigation provided a rational foundation for respondent’s
determination that petitioners received $166,831 for the
redemption of Tony’s CRC stock. The burden remains on
petitioners to rebut the presumption of correctness of
respondent’s determination. See Rule 142(a); Pittman v.
Commissioner, 100 F.3d 1308, 1316 (7th Cir. 1996), affg. T.C.
Memo. 1995-243.
In contending that Tony received only $50,000 cash for the
CRC stock redemption, petitioners maintain that CRC discharged no
indebtedness of Tony’s because Tony owed CRC nothing. Petitioners
contend that Tony received no advances from CRC and that Robert
altered CRC’s books to reflect Tony’s alleged corporate debt.
The evidence does not support petitioners’ contention, which, as
previously discussed, seems inconsistent with their reporting on
their 1992 Federal income tax return a $159,100 sale price for
the CRC stock. A former employee of Conley, McDonald & Sprague
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