-41-
until it gained possession of the property. Coastline's only
responsibility upon the execution of the contract of sale was the
payment of real estate taxes.
Coastline also did not have full legal title at the time the
contract of sale was executed. Under California law, delivery
and acceptance of a deed passes full legal title. Cal. Civ.
Code, sec. 1056 (West 1982). We have only the Grant Deed dated
"as of January 1, 1992" and notarized on November 17, 1994, in
the record. Even if the deed were effective retroactively to
January 1, 1992, Coastline did not have title to Saddle Rock on
June 21, 1991, when petitioner transferred $188,000 from
Coastline's account to petitioners' personal account.
On June 21, 1991, Coastline was not the owner of Saddle
Rock, and, therefore, no portion of the money transferred from
Coastline's account was in payment for petitioner's interest in
Saddle Rock.
In summary, petitioners have unreported income to the extent
of the moneys transferred into their personal accounts and to the
extent that moneys in Coastline accounts were used to pay
expenses of Saddle Rock and Martis Landing.
In 1991, petitioners returned to Kortava $165,000,
representing a portion of the moneys received from him. This
repayment should be taken into account in the parties' Rule 155
computation.
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