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There is a common denominator for determining whether the
shares were qualified appreciated stock on the transfer date and
whether petitioners are subject to the substantiation
requirements. That common denominator is whether, on the
transfer date, market quotations with respect to the shares were
readily available on an established securities market. See sec.
170(e)(5)(B)(i); sec. 1.170A-13(c)(7)(xi)(A), Income Tax Regs.3
Because we find that, on the transfer date, market quotations
with respect to the shares were not readily available on an
established securities market, (1) the shares were not qualified
appreciated stock, (2) petitioners are subject to the
substantiation requirements (which they failed to satisfy), and
(3) as a result of either (1) or (2), or both, they are not
entitled to the disallowed deductions.
2(...continued)
deduction in excess of $5,000 is claimed), no deduction is
allowable. Respondent has, however, in effect, allowed a
deduction of $33,338 for 1994. See supra, Respondent’s
Adjustments. We have accepted such a concession in the past.
Hewitt v. Commissioner, 109 T.C. 258, 266 (1997), affd. without
published opinion 166 F.3d 332 (4th Cir. 1998).
3 The substantiation requirements apply unless, on the
transfer date, the shares were “publicly traded securities to
which � 1.170A-13(c)(7)(xi)(B) does not apply”. See sec. 1.170A-
13(c)(1)(i), Income Tax Regs. That condition is met only if, on
the transfer date, with respect to the shares, market quotations
were readily available on an established securities market,
without application of the special rule found in subdiv. (B) of
sec. 1.170A-13(c)(7)(xi), Income Tax Regs., and subject to the
exception set forth in subdiv. (C) thereof. See sec. 1.170A-
13(c)(7)(xi)(A), Income Tax Regs.
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