Henry Allen Waters - Page 3

                                        - 3 -                                         
               Petitioner continued his search for a new home and, in July            
          1989, attempted to purchase another house.  Once again,                     
          petitioner's application for a loan was denied due to his recent            
          bankruptcy filing and his outstanding obligations under the debt            
          repayment plan.                                                             
               Meanwhile, petitioner found a buyer for his Richmond home,             
          and he agreed to sell the house for $125,000.  The grant deed               
          effectuating the transfer was signed by petitioner on July 24,              
          1989, and the transaction went to settlement on August 1, 1989,             
          at which time the deed was filed with the recorder's office in              
          Contra Costa County.  Total proceeds to petitioner were reduced             
          by (among other settlement charges) closing costs of $2,000 and             
          prorated property taxes of $80.44.  Settlement charges to the               
          purchaser were $5,735.36, including a loan origination fee of               
          $2,368.75.  Petitioner, presumably believing that he would be               
          eligible for nonrecognition treatment under section 1034(a), did            
          not report as taxable income on his 1989 return any gain from the           
          sale of his old residence.                                                  
               During 1989, up to the date he sold the property, petitioner           
          paid $7,532.08 in mortgage interest on his Richmond home.                   
          Nevertheless, on his 1989 Schedule A--Itemized Deductions,                  
          petitioner reported a home mortgage interest deduction of                   
          $11,582, which amount presumably includes the $7,532.08 noted               
          above and a portion of the closing costs and other charges                  
          reported on the settlement statement relating to the transfer of            
          the Richmond property.                                                      



Page:  Previous  1  2  3  4  5  6  7  8  9  10  Next

Last modified: May 25, 2011