James E. Copley and Cynthia R. Copley - Page 15


               Cost                          116,096                                  
               Less depreciation                 36,536                               
               Adjusted basis                               79,560                    
               Gain on sale                                 20,926                    
               Capital loss carryover (from 1987)              3,100                  
               Taxable gain                                   17,826                  
               After the notice of deficiency was issued, petitioners filed           
          an amended return for 1989 with an amended Form 2119, wherein               
          they recomputed their gain on the sale of the California property           
          as follows:                                                                 
                    Selling price of home              $110,000                       
                    Expense of sale                       9,514                       
          Amount realized                     100,486                                 
                    Basis of home sold                   84,341                       
                    Gain on sale                         16,145                       
          Petitioners also reported that they had not replaced their home             
          and did not plan to do so within the replacement period.                    
               At trial, petitioner presented a more detailed calculation             
          of the gain realized, indicating that the difference between the            
          gain determined by respondent and that calculated by petitioners            
          results from (1) a difference of $549.09 in the original cost of            
          the property, (2) a difference of $1,212.75 in the depreciation             
          of the property, and (3) an alleged loan of $4,700 that                     
          petitioner subtracted from the selling price to arrive at the               
          amount realized.                                                            
               Petitioner provided no evidence to explain the discrepancies           
          in cost or depreciation, other than his own testimony that he               
          claimed excess depreciation intentionally.  With respect to the             
          "loan" of $4,700, petitioner testified that he borrowed the money           

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