William S. Hagaman, Bonnie C. Hagaman v. Commissioner of Internal Revenue

WELLFORD, Senior Circuit Judge.

We AFFIRM the decision of the Tax Court, cited as 56 T.C.M. (P-H) 2,948 (1987), on this appeal, but REMAND to that court to deal with the issue of the effects of IRC § 312(a).1

First, we set out essential stipulated facts for an understanding of the decision reached. William S. Hagaman (Hagaman) and his wife, Bonnie (Mrs. Hagaman), Tennessee residents, filed joint tax returns from 1975 through 1978 (a.k.a., “the years *687in question”) using a cash basis of accounting. Previous to 1975, Hagaman had been in the trucking and real estate development business and then…