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MEMORANDUM FINDINGS OF FACT AND OPINION
HALPERN, Judge: By notice of deficiency (the notice),
respondent determined a deficiency of $259,874 in petitioners’
1997 Federal income tax. By the petition, petitioners assign
error to respondent’s determination. Petitioners also assign
error to respondent’s denial of their claims for refund for 1997.
The allowance of one or more of those claims would result in a
refund of $45,400, the amount of tax petitioners paid for 1997.1
After concessions,2 the issues for decision are whether
petitioners are entitled to: (1) Avoid paying tax on the 1997
sale of 634,100 shares of Solv-Ex Corp. (Solv-Ex) common stock
issued to petitioner John S. Rendall (Mr. Rendall) on the ground
that they received no benefit from the proceeds of the sale; (2)
alternatively, if they are held to be taxable on that sale,
1 Petitioners’ originally filed 1997 return reports total
tax due of $383,632, total tax payments of $45,400, and an amount
owed equal to the difference, $338,232 (mistakenly computed to be
$338,630 on the return). Pursuant to sec. 6211(a), Internal
Revenue Code of 1986, as amended, the notice determines a
deficiency equal to the excess of the tax properly due, $643,506,
over the tax shown on the return, $383,632. The parties
stipulate that the $338,630 originally reported by petitioners as
the amount owed for 1997 has never been paid, except for
$2,001.89 collected as offsets to refunds due petitioners for
2001 and 2002. The record does not indicate whether the balance
has been assessed pursuant to sec. 6201(a)(1), Internal Revenue
Code of 1986, as amended.
2 Petitioners concede that petitioner Christobel Rendall is
not entitled to relief from joint and several liability (innocent
spouse relief) with respect to any deficiency or underpayment for
1997.
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Last modified: May 25, 2011