1244 Stock

ock

United States Tax Cases (1913-1999), [97-2 USTC ¶50,905], U.S. District Court, Dist. Ore., Dennis R. Maze and Beatrice V. Maze, husband and wife, Plaintiffs v. United States of America, Defendant , Summary judgment: Genuine issues of material fact: Capital gains and losses: Small business stock:, (Oct. 10, 1997), (Oct. 10, 1997)

[97-2 USTC ¶50,905] Dennis R. Maze and Beatrice V. Maze, husband and wife, Plaintiffs v. United States of America, Defendant

U.S. District Court, Dist. Ore., Civ. 96-1000-JE, 10/10/97

[Code Secs. 1244 and 7402 ]

Summary judgment: Genuine issues of material fact: Capital gains and losses: Small business stock: Evidence.--The government was denied summary judgment on the issue of an individual’s entitlement to a deduction against ordinary income for a loss on the worthlessness of small business stock because genuine issues of material fact existed regarding the stock’s qualification as Code Sec. 1244 stock. The government contended that the taxpayer would not be able to substantiate the three requirements for obtaining tax benefits under Code Sec. 1244 . However, with respect to the “small business” requirement, the record supported an inference that the aggregate funds of the corporation that issued thestock did not exceed $1 million on the issue date. With respect to the requirement that qualifying stock be issued for money or other property, the taxpayer produced enough evidence to raise a question of fact as to whether he gave the corporation money in exchange for the stock. Finally, the government failed to satisfy its burden of showing that there was no genuine issue of material fact concerning whether the corporation satisfied the gross receipts test. BACK REFERENCES: ¶32,500.32 and 42,205.105

Gregory Byrne, 1001 S.W. 5th Ave., Portland, Ore. 97204, for plaintiffs. Kristine Olson, United States Attorney, Portland, Ore. 97204, Barbara Johnson, Department of Justice, Washington, D.C. 20530, for defendant.

OPINION AND ORDER...