John C. and Tate M. Todd - Page 20




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                    3.  Section 1.170A-13(c)(7)(xi)(A), Income Tax Regs.              
               Section 1.170A-13(c)(7)(xi)(A), Income Tax Regs., describes            
          circumstances in which the market quotations requirement is met             
          for purposes of exempting contributions of certain publicly                 
          traded securities from the substantiation requirements.  See sec.           
          1.170A-13(c)(1)(i), Income Tax Regs.  Section 1.170A-                       
          13(c)(7)(xi)(A), Income Tax Regs., does not purport to be                   
          applicable to the interpretation of the term “qualified                     
          appreciated stock”.  Nevertheless, given our conclusion as to the           
          consistent meaning of the market quotations requirement, we                 
          believe that section 1.170A-13(c)(7)(xi)(A), Income Tax Regs.,              
          also describes circumstances in which the market quotations                 
          requirement is met for the purpose of determining whether the               
          shares constituted qualified appreciated stock.5                            
               In the petition, petitioners aver that the market quotations           
          requirement was satisfied by virtue of the Bancorp shares’                  
          satisfying either subdivision (1) or (2) of section 1.170A-                 
          13(c)(7)(xi)(A), Income Tax Regs.  During the trial of this case,           
          however, petitioners conceded that, on the transfer date, the               
          Bancorp shares did not satisfy any of the subdivisions of section           


               5  We need not be concerned with the special rule provided             
          in sec. 1.170A-13(c)(7)(xi)(B), Income Tax Regs., which applies,            
          among other conditions, only if the issue of a security in                  
          question is regularly traded in a market that is reflected by the           
          existence of an interdealer quotations system for the issue.                
          That condition was not here met.  See sec. 1.170A-                          
          13(c)(7)(xi)(B)(2)(ii), Income Tax Regs.                                    





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