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estate previously transferred to TSI from L&A8, and would pay to petitioner
$5,000 on execution of the Agreement, $20,000 within 60 days of the execution
of the agreement, and $163,803 payable in 90 monthly installments (effectively
paying the mortgage on the 2.546-acres of real estate).9 The Agreement
further provided that all obligations contained in the prior agreements
entered into between petitioner and Gilbert (dated July 24, 198510, and March
8, 1988) relating to the ownership of the TSI stock were to be considered
completely satisfied and released as a result of this agreement. Petitioner
did not report the income attributable to this transaction on his tax return.
Respondent issued a statutory notice of deficiency to petitioner
asserting deficiencies in and additions to petitioner's Federal income tax.
Respondent determined that petitioner failed to report Schedule C gross
receipts, had not substantiated certain amounts of claimed Schedule C business
8
Petitioner objects to this finding of fact. Petitioner
contends that the title report to the tract of land does not
reflect the transfer. We do not find this fact to be
dispositive. As the title report provides:
This report * * * is no way intended to warrant or guarantee
the title, nor is it in any way an opinion to the title.
* * * It is the intention herein only to show a list of
instruments, if any, that might have been placed of record
between the dates shown above * * *.
Furthermore, respondent contends and evidence presented indicates
that it was a "contract of deed arrangement" (i.e., deeds were to
be transferred at a later date). Accordingly, we find the
provision in the agreement executed by petitioner, TSI, and
Gilbert to be controlling and therefore, the real estate was
transferred.
9
Petitioner argues that L&A was the debtor on the mortgage
and therefore one-half of the gain is attributable to Gilbert.
However, the evidence indicates that TFC paid off L&A's note in
order to secure a warranty of deed and recorded a mortgage
against the warranty deed prior to the reconveyance of the
property from TSI to petitioner.
10
The agreement referred to was dated July 25, 1985; however,
the discrepancy is not material.
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