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distributed to Coastal from the escrow account is approximately
equal to Mall-associated liabilities of Pecaris for security
deposits, real property taxes, and prepaid rents (see infra note
14) that were assumed or taken subject to by Coastal. The relief
of Pecaris of responsibility for those obligations was part of
the consideration received by Pecaris on the sale of the Mall.
The amount realized by Pecaris on the sale of the Mall stands at
$4.8 million.
(b) Pecaris Adjusted Basis
Respondent, in computing the larger gain that she determined
using an amount realized of $4.8 million, of course allowed the
entire adjusted basis of the Mall to be used in computing the
resulting gain. It's only petitioners, in their effort to leave
the tax position of petitioner's Pecaris partners unaffected, but
treat petitioner as having no share of the Pecaris partnership
gain, who came up with the notion that what Pecaris sold was a
75-percent undivided interest in the Mall for $3.6 million. This
led to petitioners' correlative argument that the Pecaris
partnership was entitled to use only 75 percent of its basis in
computing the gain on that sale.
Petitioners' argument suffers from a fatal flaw.
Petitioner's recharacterization of the transaction as a sale by
Pecaris of a 75-percent undivided interest in the Mall and a
Pecaris distribution to petitioner, followed by a contribution by
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