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Journal Entry approving the Property Settlement Agreement was
filed on September 7, 1988.
On his 1988 income tax return, petitioner, as stipulated by
the parties, reported long-term capital gain of $486,002 (rounded
to the nearest dollar) with respect to the Blackbob exchange. In
the statutory notice of deficiency, the Commissioner determined
that petitioner received unreported long-term capital gain of
$900,000 (the difference between the $1,386,002.30 cash paid by
Suzanne and the $486,002.30 reported by petitioner). Upon
petitioner's showing that he paid $100,000 for his children's
ownership interests in Blackbob,1 which he transferred to
Suzanne, respondent has since conceded $100,000 of the $900,000
long-term capital gain ascribed to petitioner.2
The Commissioner and petitioner agree that an exchange of
interests occurred between petitioner, Suzanne, and Elaine. They
both agree that Elaine conveyed by deed her interest in Blackbob
to petitioner, which he subsequently transferred to his sister.
They agree that Suzanne provided $800,000, which was deemed a
1 Actually, the title company paid only $99,847.39 instead
of $100,000 on petitioner's behalf to his children, but nothing
here appears to turn upon the comparatively minor difference.
Perhaps it represents part of the title company's fee for its
participation as escrow agent.
2 The parties have stipulated with respect to a number of
issues not in controversy now, and the Commissioner has conceded
that petitioner is not liable for the section 6661(a) addition to
tax with respect to the items involved in the foregoing settled
issues.
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