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basis in Woodbine to reflect the taxable income accrued to Howard
Berger under section 446(b) and Jud Plumbing & Heating v.
Commissioner, 153 F.2d 681 (5th Cir. 1946), by reason of his
transfer of March 14, 1989, to her. We believe that her basis
should be so adjusted.
We therefore distinguish Godlewski v. Commissioner, supra,
which involved a transfer on which no gain or other income was
recognized by either spouse. What Godlewski really rejects is
treating the transfer of the interest in the house in question as
a sale when section 1041(b) dictated that it should be treated as
a gift. Making adjustments to the basis in Woodbine in our case
to reflect Howard's income accrual on his transfer to Alice does
not present the same difficulty.
In order to determine Alice Berger's gain upon the transfer
of Woodbine to the Kunkowskis, we should make all adjustments to
the basis of Woodbine that are properly attributable to capital
account up to the time of that transfer. Secs. 1016(a),
7701(a)(42)-(44); United States v. Hill, 506 U.S. 546, 555
(1993); Ayer v. Commissioner, 37 B.T.A. 767, 778 (1938), vacated
on other grounds 100 F.2d 850 (1st Cir. 1939); sec. 1.1016-2(a),
Income Tax Regs. Proper adjustments are to be made for the
period of joint ownership by both Howard and Alice Berger, for
the income accrued when Howard Berger's interest was transferred
to Alice Berger, and for the subsequent period of sole ownership
by Alice Berger. Some of these adjustments, as we have seen,
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