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v. Eubank, 311 U.S. 122 (1940); Helvering v. Horst, 311 U.S. 112
(1940); Lucas v. Earl, 281 U.S. 111 (1930). The actual reduction
to possession is not a requirement. See Helvering v. Horst,
supra; Lucas v. Earl, supra. Therefore, petitioner cannot avoid
taxation on the capital gain from the sale of the 159,500 units
based on the understanding by the purchasers that the proceeds
would be used for CDM.
Furthermore, even if it would have been illegal for
petitioner to keep the proceeds, illegal income is still taxable,
and it is still proper to tax petitioner on the proceeds as he
owned the units. See James v. United States, 366 U.S. 213, 218
(1961).
III. Conclusion
Petitioner chose to sell the 159,500 units in Colorcom to
third parties. Accordingly, petitioner recognized a capital gain
for the amount realized less adjusted basis in the year of the
sale. Since petitioner has not proven the adjusted basis of the
Colorcom units sold was greater than zero and has not proven an
exception to the general rule requiring recognition of the entire
gain in the year of sale, we sustain respondent’s determination.
In reaching all of our holdings herein, we have considered
all arguments made by the parties, and, to the extent not herein
discussed, we find them to be irrelevant or without merit.
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