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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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