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302(b)(3), I.R.C. None of the cross-default and cross-
collateralization provisions made P-husband’s post-
transaction interest one “other than an interest as a
creditor.”
2. R’s contention that Ps’ sale of their R Corp.
stock should be analyzed under sec. 304’s rules
governing sales of stock between corporations under
common control must be rejected for lack of evidence
because it was raised only in posttrial briefing and is
a “new matter” rather than a “new argument.”
3. P-wife is a “2-percent shareholder” under
section 1372, I.R.C., because the rules of section 318,
I.R.C., attribute to her the ownership of the H Corp.
stock of both her husband and son during 1997;
accordingly, the H Corp. health insurance premiums are
includible in her income, subject to a deduction of a
percentage of their amount under section 162(l)(1)(B),
I.R.C.
Terry L. Zabel, for petitioners.
Bryan E. Sladek, for respondent.
HOLMES, Judge: Richard Hurst founded and owned Hurst Mecha-
nical, Inc. (HMI), a thriving small business in Michigan that re-
pairs and maintains heating, ventilating, and air conditioning
(HVAC) systems. He bought, with his wife Mary Ann, a much small-
er HVAC company called RHI; and together they also own the
building where HMI has its headquarters.
When the Hursts decided to retire in 1997, they sold RHI to
HMI, sold HMI to a trio of new owners who included their son, and
remained HMI’s landlord. Mary Ann Hurst stayed on as an HMI
employee at a modest salary and with such fringe benefits as
health insurance and a company car.
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