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with the adequate identification requirements.” Respondent
concludes that, because “[a]t the time of the sale” Mr. Rendall
failed to specify to Merrill Lynch the shares to be sold, as
required by section 1.1012-1(c)(3)(i)(a), Income Tax Regs., there
was no “adequate identification” of the sold shares. Therefore,
Mr. Rendall’s cost basis in those shares must be determined by
applying the FIFO method.
Again, we agree with respondent. The May 1997
correspondence described supra involving Merrill Lynch, Solv-Ex,
and counsel for each demonstrates that the two sides were in
communication before the sale of pledged shares. In late May,
when the sale of pledged shares appeared inevitable, Solv-Ex, on
behalf of Mr. Rendall, could have identified to Merrill Lynch the
shares to be sold; e.g., by making that identification in the May
27, 1997, letter from counsel for Solv-Ex to counsel for Merrill
Lynch acknowledging the transfer of the pledged shares to Merrill
Lynch’s name. In fact, Mr. Rendall testified at trial that he
could have identified the stock to be sold at or before the time
of sale. Therefore, we find that Mr. Rendall was not precluded
by Merrill Lynch from identifying those shares “At the time of
the sale”, which would have satisfied the requirements of section
1.1012-1(c)(3)(i)(a), Income Tax Regs.
Mr. Rendall’s testimony and an unobjected-to proposed
finding of fact based upon that testimony establish that he
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