James P. De Ocampo and Marla L. De Ocampo - Page 4

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          petitioners were late with payments of insurance premiums and               
          property taxes on the Montclair property, Home Savings added the            
          delinquent amounts to the balance of the mortgage held by Mr. De            
          Ocampo's parents.  Delinquency notices were mailed to the residence         
          of Mr. De Ocampo's parents.                                                 
               Petitioners claimed home mortgage interest deductions on their         
          tax return for the Montclair property from the time it was                  
          purchased by Mr. De Ocampo's parents.                                       
               Petitioners sold the Curtis property to Mr. De Ocampo's                
          parents on December 28, 1989, for $215,000.  Mr. De Ocampo's                
          parents purchased the Curtis property so that another son, Richard,         
          could live there.  Mr. De Ocampo's parents obtained the mortgage on         
          the Curtis property, and Richard made the mortgage payments.                
               Petitioners received $91,301.52 from the escrow agent on               
          December 28, 1989, with respect to the sale of the Curtis property.         
          Petitioners used a portion of the sale proceeds to purchase an              
          $80,000 cashier's check that was used as a deposit with respect to          
          the purchase of the Montclair property.  The purchase of the                
          Montclair property closed on December 29, 1989.                             
               On January 14, 1992, Mr. De Ocampo's parents transferred title         
          to the Montclair property to petitioners.  A notation on the deed           
          shows that the transfer was treated as a gift.  On July 28, 1992,           
          petitioners transferred a one-half interest in the Montclair                
          property back to Mr. De Ocampo's parents because petitioners were           
          told by a friend that the transfer to them from Mr. De Ocampo's             




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