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value of property other than money received. Sec. 1001(b). We
conclude that the fair market rental value of the new apartment
petitioner received rent free from Seawall constitutes an amount
realized from the disposition of his leasehold interest,
receivable pro rata over the 3-year period as determined by
respondent. See Alstores Realty Corp. v. Commissioner, 46 T.C.
363, 374 (1966).
Petitioner argues that the rent on the new apartment, less
the rent on rooms 103 and 141, multiplied by his life span
constitutes "additional rent" that should offset the gain
realized on the disposition of his leasehold interest.
Petitioner argues, in substance, that his increased housing costs
should be deductible. We do not agree. Petitioner simply has
chosen a more costly apartment in which to reside. This
increased expense is a nondeductible personal expenditure. Sec.
262.
Penalties
Respondent determined that petitioner is liable for a
penalty for fraud under section 6663 for the taxable year 1989.
Section 6663(a) provides that there shall be added to the tax an
amount equal to 75 percent of the portion of the underpayment
that is attributable to fraud. Section 6663(b) provides that if
the Commissioner establishes that any portion of an underpayment
is due to fraud, the entire underpayment is treated as
attributable to fraud, unless the taxpayer proves that some
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