John C. and Tate M. Todd - Page 13




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               quotations are published on a daily basis in a                         
               newspaper of general circulation throughout the United                 
               States.                                                                
               (If the market value of an issue of a security is                      
               reflected only on an interdealer quotation system, the                 
               issue shall not be considered to be publicly traded                    
               unless the special rule described in paragraph                         
               (c)(7)(xi)(B) of this section is satisfied.)                           
          III.  Discussion                                                            
               A.  Introduction                                                       
               Petitioners are not entitled to the disallowed deductions if           
          the shares were not, on the transfer date, “qualified appreciated           
          stock” (qualified appreciated stock), within the meaning of                 
          section 170(e)(5)(B).  If the shares were not qualified                     
          appreciated stock, then, because there is no dispute that the               
          shares were contributed to a private foundation (other than a               
          private foundation described in section 170(b)(1)(E)),                      
          petitioners’ deduction on account of the transfer cannot exceed             
          $33,338.1  Alternatively, petitioners are not entitled to the               
          disallowed deductions if they are subject to, and failed to                 
          satisfy, the substantiation requirements set forth in section               
          1.170A-13(c)(2)(i), Income Tax Regs. (the substantiation                    
          requirements).2                                                             


               1  There is no dispute that the shares were capital assets             
          in petitioner’s hands and that his adjusted basis in the shares             
          was $33,338.                                                                
               2  Pursuant to sec. 1.170A-13(c)(1)(i), Income Tax Regs., if           
          the substantiation requirements are not satisfied (and a                    
                                                             (continued...)           





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