- 16 - Individuals, sec. 29.12, at 29-34 (2d ed. 1995 & Supp. 1997). As section 1.1038-1(a)(1), Income Tax Regs., explains: It is immaterial, for purposes of applying * * * [section 1038], whether the seller realized a gain or sustained a loss on the sale of the real property, or whether it can be ascertained at the time of the sale whether gain or loss occurs as a result of the sale. It is also immaterial what method of accounting the seller used in reporting gain or loss from the sale of the real property or whether at the time of reacquisition such property has depreciated or appreciated in value since the time of the original sale. * * * Petitioner also argues that the $719,480 he received in connection with the original sale was not income, but only a “receipt”. We may dismiss this argument by noting that it has been long settled that all amounts received in connection with a realization event, which in this case was the original sale, must be included in income under sections 1001 and 61(a). Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955). Petitioner had “complete dominion” over the cash in that he had no expectation that he would ever have to return it to the buyer, Commissioner v. Indianapolis Power & Light Co., 493 U.S. 203, 210 (1990); Herbel v. Commissioner, 106 T.C. 392, 413 (1996).8 8 We note in passing that we could alternatively view the 1988 sale not as a sale of the property as such, but as the sale to the partnership for $719,480 of an option to purchase the property for the face amount of the note, $2,030,400, especially if the nonrecourse note were seen as invalid under the analysis in Estate of Franklin v. Commissioner, 64 T.C. 752, 762-763 (1975), affd. on other grounds 544 F.2d 1045 (9th Cir. 1976), because the face amount of the note so greatly exceeded the fair (continued...)Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011