- 11 - obligor. The risk of a decline in value rested on John, not petitioners. The rewards of ownership were also transferred to John by the Exchange Agreement. Any increase in value thereafter was his. Even though petitioners did not transfer legal title to John when they signed the Exchange Agreement, they agreed to transfer title at John's request. The parties also behaved as if John owned the property after the Exchange Agreement. John used the property as collateral on one of his personal obligations and assigned the rents to guarantee repayment of this loan. Moreover, when ownership of the property became confused, he fought for and got title transferred back into his name rather than into petitioners'. We agree with respondent that petitioners are not entitled to deduct depreciation from Chancery Court for 1988. All the credible evidence indicates that petitioners transferred the benefits and burdens of ownership to John on August 25, 1987, when they signed the Exchange Agreement. 2. Sawgrass John also involved petitioners in the purchase and resale of 7933 Sawgrass Circle, Citrus Heights, California (Sawgrass). Petitioners purchased the house from Sharon Benvenuti, obtaining a grant deed from her on March 28, 1988, but not recording it until August 16, 1988. The house stood empty during petitioners'Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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