Alice Berger, et al. - Page 69

                                       - 69 -                                         
          basis in Woodbine and her taxable gain on the sale to the                   
          Kunkowskis.  Because the record does not enable us to ascertain             
          all the figures, we leave the details to the Rule 155                       
          computation.                                                                
               Before leaving the subject of basis, we address the Woodbine           
          receivables, which were omitted from the Woodbine 1989 balance              
          sheet that showed the unrecovered cost of the Woodbine assets to            
          be $75,945.  The accounts receivable generated by the sale of               
          mausoleum crypts were ordinary income assets16 in the hands of              
          Howard and Alice Berger.  Sec. 1221(1); Philhall Corp. v. United            
          States, 546 F.2d 210, 215 (6th Cir. 1976) (land option, ordinary            
          income); McHugh v. Commissioner, T.C. Memo. 1957-4 (land                    
          contracts, ordinary income).  They had a zero basis in the hands            
          of Alice Berger to the extent they had not been properly taken              
          into Woodbine income by Howard at the time of his transfer of               
          March 14, 1989, to Alice, and by Alice, at the time of the                  
          completion of the Phase II mausoleum.  Bongiovanni v.                       
          Commissioner, 470 F.2d 921, 923 (2d Cir. 1972) (zero basis),                
          revg. on other grounds T.C. Memo. 1971-262; Hempt Bros., Inc. v.            
          United States, 354 F. Supp. 1172, 1177 (M.D. Pa. 1973) (zero                

          16The test for whether income from sales of land is ordinary                
          income or capital gain is whether (1) the taxpayer was engaged in           
          the trade or business, (2) whether the taxpayer held the property           
          primarily for sale in the business, and (3) whether the sales               
          contemplated by the taxpayer were "ordinary" in the course of               
          that business.  Bramblett v. Commissioner, 960 F.2d 526, 530 (5th           
          Cir. 1992), revg. T.C. Memo. 1990-296.  Under this test, Woodbine           
          receivables from crypt sales were ordinary income assets.                   




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