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testified that the unimproved land was inherited from his
grandmother and was free and clear of any encumbrances. The
Information Report further reflected that the net proceeds
received by the sellers were $9,007.08. The difference between
the sales price of $10,500 and the net amount received of
$9,007.08 by the sellers represents selling expenses in the
amount of $1,492.92.
Moreover, petitioner and Lola Cowan were residents of the
State of Washington during the year in issue. Washington is a
community property state. Petitioner's testimony was that he
inherited the property from his grandmother. Inherited property
constitutes separate property in Washington and is not subject to
the community property rules. Wash. Rev. Code Ann. Sec.
26.16.030 (1989). However, the Information Report reflects the
sellers of the property to be petitioner and Lola Cowan.
Petitioner and Lola Cowan as the listed sellers on the
Information Report is compelling evidence which suggests that, if
the property was separate property, it was converted to community
property. See Volz v. Zang, 113 Wash. 378, 194 P. 409 (1920).
Individuals who are married and reside in a community
property state must each report one-half of their community
property income if they file separately for Federal income tax
purposes. United States v. Mitchell, 403 U.S. 190 (1971).
Therefore, we hold that petitioner must report only one-half of
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