- 33 - 1989 Schedules C, based on our findings and holdings that petitioners did not own certain of the vending machines and that they were not entitled to depreciation and other deductions. D. Transfer of Crestwood Property to Prudential Bancorp On September 15, 1989, petitioners transferred the Crestwood property to Prudential Bancorp. In exchange, petitioners were released from their obligations to Southern Pacific and NBSC, the debt owed Hollis Bowden, and the $1.4 million loan obligation to Concordia Bank. In addition, all debt giving rise to mechanic's liens on the property was satisfied. The obligations to Southern Pacific and NBSC were in connection with petitioners’ corporations' debts and petitioners’ personal guaranties. Prudential Bancorp, after obtaining the Crestwood property from petitioners, sold it to unrelated third parties for $2,525,000, its fair market value. Petitioners reported, on their 1989 income tax return, that the sale price of the Crestwood property was $1,786,000, with a cost basis of $1,872,776.17 It appears that petitioners derived the “sale price” from their computation or estimate of the amount of debt canceled by means of the settlement. Petitioners therefore reported a loss of $86,776 on their 1989 tax return. On brief, petitioners contend that the sale price should be 17 On brief, petitioners erroneously state a “total cost of $1,786,000" and “a sales price * * * of $1,872,776".Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Next
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