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Addition to tax Penalty
Year Petitioner(s)1 Deficiency Sec. 6651(a) Sec. 6662
1989 SH $7,963 $1,472 $1,593
1989 MH 16,656 --- 3,331
1990 SH & MH 129,181 --- 25,836
1 Petitioners are: (1) SH--Sooren Hovhannissian; (2) MH--
Estate of Mary Hovhannissian, Deceased, Sooren Hovhannissian,
Executor; and (3) SH & MH--Sooren Hovhannissian and Estate of
Mary Hovhannissian, Deceased, Sooren Hovhannissian, Executor.
After concessions by both parties,1 we first address whether
petitioner Sooren Hovhannissian (petitioner) is required to
include in his 1990 gross income, as gain under section 1038(b),2
$383,288, the portion of the cash he received on an installment
sale of real property in 1988 that he had not previously reported
as gain. We hold that section 1038 governs petitioner’s
reacquisition in 1990 of the property upon the buyer’s default on
the installment note secured by the property; petitioner must
include $383,288 as gain in his 1990 gross income. We also hold
that petitioner is not entitled to claim a section 165 loss in
1990 on his reacquisition of the property. As a result,
1 Petitioner conceded the addition to tax, and respondent
conceded the penalties. Petitioners argued on brief that they
have conceded only $3,120 of their claim for car and truck
expenses for taxable year 1990. However, the parties’
stipulation clearly states that petitioners conceded $4,449 of
those claimed deductions.
2 All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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