- 16 -
Individuals, sec. 29.12, at 29-34 (2d ed. 1995 & Supp. 1997). As
section 1.1038-1(a)(1), Income Tax Regs., explains:
It is immaterial, for purposes of applying * * *
[section 1038], whether the seller realized a gain or
sustained a loss on the sale of the real property, or
whether it can be ascertained at the time of the sale
whether gain or loss occurs as a result of the sale.
It is also immaterial what method of accounting the
seller used in reporting gain or loss from the sale of
the real property or whether at the time of
reacquisition such property has depreciated or
appreciated in value since the time of the original
sale. * * *
Petitioner also argues that the $719,480 he received in
connection with the original sale was not income, but only a
“receipt”. We may dismiss this argument by noting that it has
been long settled that all amounts received in connection with a
realization event, which in this case was the original sale, must
be included in income under sections 1001 and 61(a).
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955).
Petitioner had “complete dominion” over the cash in that he had
no expectation that he would ever have to return it to the buyer,
Commissioner v. Indianapolis Power & Light Co., 493 U.S. 203, 210
(1990); Herbel v. Commissioner, 106 T.C. 392, 413 (1996).8
8 We note in passing that we could alternatively view the
1988 sale not as a sale of the property as such, but as the sale
to the partnership for $719,480 of an option to purchase the
property for the face amount of the note, $2,030,400, especially
if the nonrecourse note were seen as invalid under the analysis
in Estate of Franklin v. Commissioner, 64 T.C. 752, 762-763
(1975), affd. on other grounds 544 F.2d 1045 (9th Cir. 1976),
because the face amount of the note so greatly exceeded the fair
(continued...)
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