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3. Offset of the Gownis’ Basis in Their Tomson Stock
By a Stipulation of Settled Issues, the parties agreed to
certain elements of the calculation of the capital gain resulting
from Tomson’s sale of property to Sembler in 1998. They also
stipulated that “any properly allowable capital costs that the
petitioners can establish with regard to equipment rental of
Tomson, Inc. [that] related to gasoline dispenser rentals” would
be taken into account in this calculation. Petitioners have not
established that Tomson incurred any capital costs for equipment
rentals related to gasoline dispensers. Consequently, the
capital gain will be calculated in accordance with the agreed
upon elements.
Petitioners contend that the gain generated by the
transaction between Tomson and Sembler increased their basis in
their Tomson stock, and, as a result, the payments made by Tomson
to the Gownis in 1998 and 1999 should not be included in the
Gownis’ income because the Gownis’ stock basis should have been
sufficient to offset the amount of these payments. Respondent
asserts that the Gownis should have included the amounts of these
distributions in income.
The parties agree that the Gownis should have reported
50 percent of the capital gain that resulted from Tomson’s sale
of property to Sembler in 1998. Consequently, the Gownis’ basis
in their Tomson stock should be increased to account for their
distributable share of the gain. Sec. 1367(a)(1); see also sec.
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