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Issue 1. Sale of Farmland
Section 61(a) broadly defines gross income as "all income
from whatever source derived". Section 61(a)(3) provides further
that gross income specifically includes gains derived from
dealing in property. The Supreme Court has repeatedly held that
Congress, in broadly defining gross income, intended to tax all
gains except those specifically exempted. Commissioner v.
Glenshaw Glass Co., 348 U.S. 426 (1955). Section 1.61-6(a),
Income Tax Regs., provides that unless specifically excluded by
law, gains realized on the sale of property are included in gross
income. Generally, gain is the excess of the amount realized
over the adjusted basis for the property sold. Sec. 1001(a).
The specific rules for computing the amount of gain or loss are
contained in section 1001 and the regulations thereunder.
Petitioner did not offer any proof that the preceding
recitation of the facts surrounding this case is incorrect. On
August 4, 1983, petitioner, petitioner's spouse, and their
daughter and son-in-law executed a $927,862.21 promissory note in
favor of FNB. They gave, among other things, a mortgage on both
the Illinois farmland and the Indiana farmland owned by
petitioner and his spouse. Thereafter, petitioner and his spouse
defaulted on this promissory note in favor of FNB as well as the
notes held by the senior lienholders on the Illinois farmland.
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