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As a result of these defaults, approximately 652 acres of
the Illinois farmland were sold in 1986 for the sum of
$721,599.97. The proceeds of the sale were divided as follows:
$669,176.55 to FNB, $13,149.91 for closing costs, and the balance
of $39,273.51 to FHA. FNB and FHA applied $147,624.52 of the
sale proceeds to accrued unpaid interest expense on petitioner's
loans, and the balance of $560,825.54 was applied to the
principal loan amounts. None of the interest applications was
reported as a business deduction on petitioner and his spouse's
joint Federal income tax return for 1986.
Petitioner's basis in the 1,120 acres of Illinois farmland
is $342,000. Accordingly, his basis in the 652 acres sold is
$199,101. Sec. 1.61-6(a), Income Tax Regs. (when part of a
larger property is sold, the cost or other basis of the entire
property is equitably apportioned among the several parts, and
the gain realized on the part of the entire property sold is the
difference between the selling price and the cost or other basis
allocated to such part).
As we previously stated, because we hold that petitioner has
not presented any evidence to establish that respondent's
determination, as modified by concessions, is incorrect, we need
not address respondent's alternative contention that petitioner
is collaterally estopped from relitigating that the sale had in
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