Earle E. Murphy - Page 18

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            assets in a liquidating distribution, he is not entitled to elect                          
            nonrecognition treatment under section 1033.7                                              
                  Respondent also determined that petitioner had additional                            
            interest income of $13,370.  Gross income includes interest                                
            income.  Sec. 61(a)(4).  On both his original and amended                                  
            returns, petitioner reported only $97 of interest income.                                  
            Petitioner's sole argument is that the interest income was                                 
            received by petitioner in his fiduciary capacity as an agent for                           
            FSRC and, thus, was properly reportable by FSRC and not by                                 
            petitioner.  The only evidence introduced by petitioner to                                 
            support this argument is his self-serving testimony that he                                
            opened several bank accounts on behalf of FSRC and DHF.  However,                          
            petitioner did not even identify these accounts.  Neither FSRC                             

            7Even if petitioner were acting as an agent of FSRC with the                               
            intention of completing a sec. 1033 transaction, we still believe                          
            that the provisions of sec. 1033 are inapplicable under these                              
            facts.  A threat of condemnation sufficient to invoke provisions                           
            of sec. 1033 exists when a representative of a governmental body                           
            or a public official authorized to acquire property for public                             
            use informs the taxpayer, either orally or in writing, that such                           
            body or such official has decided to acquire the taxpayer's                                
            property.  Tecumseh Corrugated Box Co. v. Commissioner, 94 T.C.                            
            360, 376 (1990), affd. 932 F.2d 526 (6th Cir. 1991); Rainier Co.                           
            v. Commissioner, 61 T.C. 68, 76 (1973), revd. on another issue by                          
            unpublished order 538 F.2d 338 (9th Cir. 1975).  The property                              
            owner must also reasonably believe that condemnation will occur                            
            if the owner does not sell the property voluntarily to a third                             
            party.  Id.  In the instant case, the parties have stipulated                              
            that "Neither petitioner nor the shareholders of FSRC or DHF                               
            received any oral or written notice from a township official that                          
            eminent domain or condemnation proceedings were contemplated."                             
            Since petitioner received no communication from Howell Township                            
            officials regarding the possibility of condemnation of the Deep                            
            Hollow Park property, we are not persuaded that the property was                           
            sold under threat of condemnation, and sec. 1033 is unavailable.                           




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