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Again, petitioners have offered no evidence or argument
pertaining to the self-employment tax. The Court has concluded
that HGAMC should be disregarded, and the record supports that
Mr. Richardson’s personal services were the prime driver of the
receipts attributed to the entity. Hence, to the extent that we
have sustained respondent’s determinations with respect to
business income, we likewise sustain the imposition of
corresponding self-employment tax thereon.
III. Capital Gain and/or Loss
On their Forms 1040 for each of the years 1996 and 1997,
petitioners claimed a $3,000 capital loss and indicated that
these losses were carried forward from prior years. Respondent
disallowed the amounts claimed, and petitioners have never
explained or substantiated their genesis. Respondent further
determined that in 1997 petitioners sold stock in a company
called Next Level Systems that was held in the name of HGAMC.
Proceeds in the amount of $8,614 were apparently received on the
sale and were not reported on petitioners’ return or that of
HGAMC. As petitioners had not established any basis in the
shares, respondent determined that the full amount constituted
capital gain.
As a general rule, a taxpayer is required on the disposition
of property to report as capital gain the excess of the amount
realized on disposition over his or her adjusted basis in the
property. Sec. 1001. Alternatively, a taxpayer (other than a
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