- 5 -
Petitioners' 1990 Federal individual income tax return
included only 45 percent of the principal received on the long-
term note. The gain was determined under the installment method.
The return failed to include, as part of the computation of gain,
the $23,000 cash received, the debt from which petitioner was
relieved in the amount of $31,200, and the remaining 55 percent
of the sales proceeds. Petitioners' 1991 return similarly
included only 45 percent of the principal payments on the long-
term note in the computation of gain under the installment
method. Petitioners' returns for 1990 and 1991 each included
only 45 percent of the interest income received on the long-term
note.
During 1990, petitioner paid Linda Friscone $17,798.02 from
the proceeds he received on the sale of the MUI stock. During
1991, petitioner paid Linda Friscone $10,041.16 from the proceeds
he received on the sale of the MUI stock.
Section 61(a)(3) includes in gross income "all income from
whatever source derived, including * * * Gains derived from
dealings in property". Section 1001(a) defines the amount of
gain from sale or other disposition of property as "the excess of
the amount realized therefrom over the adjusted basis". The
amount realized also includes "the amount of liabilities from
which the transferor is discharged as a result of the sale or
disposition." Sec. 1.1001-2(a)(1), Income Tax Regs. Section
1001(c) requires that "Except as otherwise provided in this
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011