Richard R. Hamlett - Page 3

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               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                                                           
               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              
               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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