- 9 -
letter, however, does not represent evidence of a consummation of
a sale of petitioner’s shares.
Petitioner and Mr. Taylor did not enter into a written stock
purchase agreement until October 17, 2001. The stock purchase
agreement provided that Mr. Taylor would pay petitioner an agreed
upon purchase price on an undefined “Closing Date”. Mr. Taylor’s
first payment to petitioner for his shares occurred on October
26, 2001, when petitioner received a check for $8,000. The
payment of the first installment of the purchase price in this
case is the best evidence of the sale of petitioner’s shares.
Accordingly, we conclude that petitioner sold his shares of
Edgington Mullins stock on October 26, 2001, for purposes of
computing petitioner’s pro rata share of the S corporation’s
items of income, credits, and deductions.
B. Capital Gain or Loss From Sale of Edgington Mullins Stock
The gain or loss realized from the sale of property is
measured by the “amount realized” less the “adjusted basis” of
the property sold. Sec. 1001(a). The amount realized consists
of “the sum of any money received plus the fair market value of
the property (other than money) received”. Sec. 1001(b). A
shareholder’s adjusted basis in his or her S corporation stock is
determined under section 1367, which provides a list of the
positive and negative adjustments to the shareholder’s basis in
his or her stock for items of income, loss, and deductions of an
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011