- 3 -
After concessions by both sides,2 the issue for decision is
whether petitioner must include in gross income for 1996 the
$100,000 that he received from the sale of stock, even though in
a later year the sale was challenged and in 2000 the sale was set
aside ab initio.3
Background
The instant case was submitted fully stipulated; the
stipulations and the stipulated exhibits are incorporated herein
by this reference.
2 The notice of deficiency lists an aggregate of more than
$2.5 million of adjustments for the 2 years in issue. The
parties have resolved more than 96 percent of this amount. What
remains is a vigorous dispute as to the tax treatment of
$100,000--less than 4 percent of these adjustments.
Petitioner concedes that the accuracy-related penalty under
sec. 6662 applies to the entire deficiencies for both years in
issue.
In the notice of deficiency, the $100,000 was determined to
be ordinary income. On answering brief, respondent concedes that
the $100,000 should be treated as long-term capital gain
(agreeing with one of petitioner’s alternative contentions), thus
reducing even further the percentage of the originally determined
deficiency remaining in dispute.
3 The parties have stipulated that some payment on the
$100,000 was made by the purchaser to petitioner in 1995. The
record does not indicate how much was paid in 1995, nor does it
indicate when in 1996 the payment of the $100,000 was completed.
In the notice of deficiency, respondent lists the entire $100,000
as an adjustment to 1996. Both parties treat the transaction,
and accordingly, any income recognition resulting therefrom, as
occurring entirely in 1996. For purposes of this opinion, we do
the same.
We also note that petitioner has not provided us with any
evidence regarding his basis in the stock.
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