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The evidence adduced at trial reveals that Bancorp
stock was traded by a single broker; stock quotations
could be obtained only from that broker; during a ten-
year period, the broker advertised the Bancorp stock
only six or eight times, in a newspaper of local
circulation; and only the issuer of the stock
maintained records of sales transactions. In view of
these facts, treating the Bancorp stock as qualified
appreciated stock would not be consistent with the
expressed intention of Congress to limit the exception
for qualified appreciated stock to “certain situations
in which the potential for abuse, including
overvaluation, is minimized.” * * *
Respondent points out that petitioners concede that the
shares were not part of an issue of securities that satisfied any
of the circumstances described in section 1.170A-13(c)(7)(xi)(A),
Income Tax Regs.
C. Discussion
1. Tax Reform Act of 1984
We begin with an examination of two sections of the Tax
Reform Act of 1984 (Tax Reform Act of 1984 or TRA), Division A of
the Deficit Reduction Act of 1984, Pub. L. 98-369, 98 Stat. 494.
The first section is TRA section 155, 98 Stat. 691, which gives
rise to the substantiation requirements and, in subsection
(a)(6)(C), defines the term “publicly traded securities” to mean
“securities for which (as of the date of the contribution) market
quotations are readily available on an established securities
market”.4 The second section is TRA section 301(b), 98 Stat.
4 While TRA sec. 155 gives rise to the substantiation
requirements, it does not impose them, but directs the Secretary
(continued...)
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