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(Investors), an S corporation wholly owned by John and Judith
Bedrosian as community property, purported to form a partnership,
Stone Canyon Partners (Stone Canyon). The validity of the
partnership is a matter of dispute between the parties. The use
of terms in this opinion, for purposes of the pending motion,
does not express any view on the validity of any of the entities
mentioned. Soward v. Commissioner, T.C. Memo. 2006-262.
In November 1999, JCB purported to purchase and sell options
on foreign currency. JCB then purported to contribute the
purchased options, the sold options, and Texas Instruments stock
to Stone Canyon, on behalf of itself and on behalf of Investors.
In calculating the basis in the interests of JCB and Investors,
the Bedrosians did not treat the options purportedly sold by JCB
as a liability subject to the provisions of section 752.
In December 1999, JCB purported to transfer its interest in
Stone Canyon to Investors. Investors acquired the Texas
Instruments stock previously purportedly contributed by JCB to
Stone Canyon. Investors claimed a basis in the Texas Instruments
stock based on the basis of the stock “in the hands” of Stone
Canyon.
On their 1999 Federal income tax return, petitioners
reported an ordinary loss of $175,000 for 1999 related to their
interest in Stone Canyon. Additionally, petitioners reported a
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Last modified: March 27, 2008