Robert Lee McWilliams - Page 7

                                                - 7 -                                                 
            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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