Kevin B. Kimberlin and Joni R. Steele, et al. - Page 16

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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             
               To reflect the foregoing,                                              

                                                  Decisions will be entered           
                                             for petitioners.                         

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