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Singer issued to Mr. Clopton a Form 1099-B, Proceeds From
Broker and Barter Exchange Transactions, for 1999. The Form
1099-B showed proceeds from the sale of “Stocks, bonds, etc.” of
$1,155,000.10.
Petitioners jointly filed a Form 1040, U.S. Individual
Income Tax Return, for 1999. On Schedule D, Capital Gains and
Losses, petitioners reported the assignment of the 20 future
annual payments of $120,000 to Singer as a sale of a capital
asset held more than 1 year. Petitioners reported a sales price
of $1,155,000, a cost or other basis of $10,334,2 and a long-term
capital gain of $1,144,666.
On December 24, 2002, respondent issued a notice of
deficiency to petitioners for the year 1999. In the notice,
respondent determined that the $1,155,000 received from Singer
was ordinary income. Respondent determined that the cost or
other basis reported on petitioners’ return with respect to the
amount received from Singer was zero.
Petitioners reported on their joint return for 1999 a short-
term capital loss of $9,088 on Schedule D, Capital Gains and
Losses, for unrelated transactions. Due to a scrivener’s error,
2The record does not reflect how petitioners computed the
cost or other basis amount of $10,334. Petitioners have not
argued or elaborated on brief with respect to this point, nor
have they argued that if we find for respondent then this basis
amount must be considered in calculating the amount of ordinary
income resulting from the sale to Singer.
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