BLAK Investments, Kyle W. Manroe Trust, Robert and Lori Manroe, Trustees, Tax Matters Partner v. Commissioner

133 T.C. No. 19

UNITED STATES TAX COURT BLAK INVESTMENTS, KYLE W. MANROE TRUST, ROBERT AND LORI MANROE, TRUSTEES, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 1283-07. Filed December 23, 2009. In 2001 two partners of partnership P borrowed Treasury securities and sold them in the open market; i.e., a short sale. They contributed the short sale proceeds and the obligation to cover the short sale to P in exchange for interests in P. The two partners claimed their bases in P were increased by the short sale proceeds but not reduced by the obligation…