- 10 -
and, second, petitioner’s argument that the precedent in the
Eleventh Circuit compels a different result.9
Courts have indicated that pledging personal assets is not
an economic outlay sufficient to increase basis. See Harris v.
United States, 902 F.2d 439, 445 n.16 (5th Cir. 1990); see also
Calcutt v. Commissioner, supra at 719-720; Luiz v. Commissioner,
T.C. Memo. 2004-21. But see Selfe v. United States, supra at 773
n.7. Moreover, petitioner has offered no authority, other than
an ambiguous invocation of Eleventh Circuit precedent, that
pledging stock might constitute an economic outlay.10 Perhaps
petitioner is relying on Selfe, though he failed to cite the case
at trial or in brief. This Court has previously disagreed with
the analysis in Selfe. Estate of Leavitt v. Commissioner, 90
T.C. 206 (1988). Nonetheless, we find the facts in Selfe
9Presumably finding Eleventh Circuit precedent more
favorable to his position, petitioner claims he resided, at the
time he filed the petition, with his mother in Florida, which is
in the Eleventh Circuit, rather than with his wife in Ohio, which
is in the Sixth Circuit. See sec. 7482. Without deciding
whether petitioner resided in the Eleventh Circuit, we focus on
whether caselaw in the Eleventh Circuit would characterize
petitioner’s pledge of stock as an economic outlay that would
increase his basis in the S corporation.
10A footnote states that a guarantor who has pledged stock
to secure a loan “has experienced an economic outlay” to the
extent that the pledged stock is not available as collateral for
other investments, because the guarantor has lost the time value
or use of his or her collateral. Selfe v. United States, 778
F.2d 769, 773 n.7 (11th Cir. 1985). Although petitioner failed
to bring this footnote to our attention, we read it in the
context of the facts in Selfe, which we distinguish.
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