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basis of the shareholder’s stock, and to the extent it exceeds
the adjusted basis of the stock, is treated as gain from the sale
or exchange of property. Secs. 301(c)(1)-(3), 316(a).
Mr. Kimberlin received the warrants as a distribution from
Spencer Trask in 1995. When a distribution is a distribution
other than cash, the fair market value of the property is
determined as of the date of distribution. Sec. 1.301-1(b),
Income Tax Regs.; see Weigl v. Commissioner, 84 T.C. 1192, 1220-
1223 (1985). Thus, the warrants Mr. Kimberlin received should be
valued at the time of receipt (i.e., 1995). See sec. 1.301-1(b),
Income Tax Regs. We previously determined that the warrants had
an ascertainable fair market value at the time of distribution,
and thus they were taxable income to Mr. Kimberlin upon their
receipt in 1995.
Contentions we have not addressed are irrelevant, moot, or
meritless.
To reflect the foregoing,
Decisions will be entered
for petitioners.
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Last modified: November 10, 2007