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sale of the five units in the amount of $111,568, and respondent
adjusted petitioner's gross income accordingly because petitioner
had failed to establish that he was entitled to gain deferral on
the basis of an involuntary conversion of the five units. After
making a negative adjustment for an operating loss carryover,
respondent increased petitioner's taxable income by $99,656.
As a threshold matter, we must determine the amount of gain
realized on the sale of the five units and, in turn, the
adjustments to petitioner's gross and taxable income that are in
issue. Section 1001(a) provides, in part, that “gain from the
sale or other disposition of property shall be the excess of the
amount realized therefrom over the adjusted basis”. Although,
initially, the parties may have disputed the cost of the five
units, it appears that the parties are now in agreement that
petitioner paid a total of $228,067 for the five units, which
amount constitutes petitioner's cost basis in the units. The
parties also agree on the adjustments to petitioner's basis in
the five units: (1) capital expenditures of $3,266 and
(2) depreciation on buildings and personal properties of
$129,483. Therefore, the parties agree that petitioner's
adjusted basis in the five units is $101,850 ($101,850 = $228,067
+ $3,266 - $129,483).
The parties, however, disagree on the amount realized by
petitioner from the sale of the five units. Petitioner reports
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