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through 1995 does indeed reflect additional income from
Excellence on Schedule E of $257,328 and additional interest
income of $7,043. Given petitioners’ lack of specific dispute
regarding the proper year for inclusion, the Court will sustain
respondent on this issue. We note, however, that neither party
has cited, nor has the Court’s research revealed, any legal
authority that would definitively resolve the underlying
substantive question of inclusion year in these circumstances.
We leave this question for another day and a more fully developed
record.
B. Distributions From Schedules K-1
Mr. Gleason’s Schedules K-1 from Alofs and Excellence for
FYE 1995 reflect property distributions of $237,000 and $360,200,
respectively, that were not reported on petitioners’ 1995 return.
Likewise, the Schedule K-1 from Alofs for FYE 1996 shows a
property distribution of $344,082 that was not reported by
petitioners. Respondent argues that these amounts are includable
as dividend income, principally on account of insufficient basis
to support tax-free treatment under section 1368(b)(1). Although
petitioners’ contentions on this point are less than clear,
statements made on reply brief suggest disagreement with the
premise that the distributions constitute a source of taxable
income.
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