Don Ballantyne and Susanne C. Ballantyne - Page 15

          Petitioner, on behalf of Balmac, applied for and obtained a $1.1            
          million bank loan based on a number of representations that were            
          consistent with a sale to Balmac.  Further, there was a grant deed          
          and deed of trust which were filed with the San Diego County                
          Recorder's office.  And finally, there was the escrow check for             
          $1,960,680.25 that was delivered to petitioner's nominee, WTC under         
          the Holding Agreement, as seller, and a $5 million installment note         
          that was secured by the recorded deed of trust.                             
               Petitioners did not attempt to show that the sale transaction          
          to Balmac was the result of mistake, undue influence, fraud, or             
          duress.  Instead, they ask us to disregard the transaction as               
          nothing but a ruse to obtain the $1.1 million bank loan and want us         
          to believe that the transaction was as they reported for tax                
          purposes.  We refuse to do so.  "[W]hile a taxpayer is free to              
          organize his affairs as he chooses, nevertheless, once having done          
          so, he must accept the tax consequences of his choice, whether              
          contemplated or not * * * and may not enjoy the benefit of some             
          other route he might have chosen to follow but did not."                    
          Commissioner v. National Alfalfa Dehydrating & Milling Co., 417             
          U.S. 134, 149 (1974).                                                       
               Where a taxpayer seeks to disavow what is purported to be a            
          sale, the burden lies with the taxpayer to prove error in the               
          Commissioner's determination that the transaction was in fact a             
          sale.  Shannon v. Commissioner, 29 T.C. 702, 718 (1958).  Here,             
          petitioners failed to prove error in respondent's determination.            

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