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T.C. 628, 636-637 (1964); Ligon v. Commissioner, 37 B.T.A. 763,
765 (1938).
III. Mr. Rendall’s Basis in the Pledged Stock Sold by Merrill
Lynch (The LIFO/FIFO Basis Issue)
Both parties cite section 1.1012-1(c), Income Tax Regs., in
support of their respective positions regarding Mr. Rendall’s
cost basis for the 634,100 shares of Solv-Ex common stock sold by
Merrill Lynch. That provision states, in pertinent part, as
follows:
� 1.1012-1 Basis of property.
* * * * * * *
(c) Sale of stock. (1) In general. If shares of
stock in a corporation are sold or transferred by a
taxpayer who purchased or acquired lots of stock on
different dates or at different prices, and the lot
from which the stock was sold or transferred cannot be
adequately identified, the stock sold or transferred
shall be charged against the earliest of such lots
purchased or acquired in order to determine the cost or
other basis of such stock * * *. If, on the other
hand, the lot from which the stock is sold or
transferred can be adequately identified, the rule
stated in the preceding sentence is not applicable. As
to what constitutes “adequate identification,” see
subparagraphs (2), (3), and (4) of this paragraph.
(2) Identification of stock. An adequate
identification is made if it is shown that certificates
representing shares of stock from a lot which was
purchased or acquired on a certain date or for a
certain price were delivered to the taxpayer’s
transferee. Except as otherwise provided in
subparagraph (3) or (4) of this paragraph, such stock
certificates delivered to the transferee constitute the
stock sold or transferred by the taxpayer. Thus,
unless the requirements of subparagraph (3) or (4) of
this paragraph are met, the stock sold or transferred
is charged to the lot to which the certificates
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