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With respect to the 2000 tax year, respondent determined
that petitioners in docket No. 8981-03 had a taxable gain of
$441,293 related to the repayment of January 3, 2000 ($800,000
repayment less $358,707 debt basis), and that petitioners in
docket No. 8983-03 had a taxable gain of $413,944 related to the
repayment of January 3, 2000 ($800,000 repayment less $386,056
debt basis).14
B. Petitioners
With respect to the 1999 tax year, petitioners contend that
the $800,000 basis of each advance offset the $500,000 repayments
13(...continued)
1997 loan from shareholder 500,000
Less: 1997 loss applied to basis (203,002)
Less: 1998 loss applied to the basis (296,998)
1997 loan basis 0
1999 loan repayment 500,000
Taxable gain on loan repayment 500,000
14Respondent attached to the docket No. 8981-03 statutory
notice of deficiency the following calculation of taxable gain on
debt repayment:
“1999” loan from shareholder 800,000
Less: 1999 loss used against loan (441,293)
Basis of 1999 loan 358,707
Repayment of loan made in 2000 800,000
Taxable gain on loan repayment 441,293
Respondent attached to the docket No. 8983-03 statutory
notice of deficiency the following calculation of taxable gain on
debt repayment:
“1999” loan from shareholder 800,000
Less: 1999 loss used against loan (413,944)
Basis of 1999 loan 386,056
Repayment of loan made in 2000 800,000
Taxable gain on loan repayment 413,944
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Last modified: May 25, 2011