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parties agree with regard to the $2,907 in legal costs, we shall
focus on the proper amount to be considered as (1) settlement
proceeds and (2) settlement charges. The settlement statements
(HUD-1s) indicate a total sales price for the five units in the
amount of $210,500. We agree with respondent that that figure is
the proper starting point for calculating amount realized. The
HUD-1s also indicate that petitioner incurred total settlement
charges of $6,248. Of that amount, $1,250 represents additional
attorney's fees, $1,229 represents amounts paid for title
insurance, and the remainder apparently represents unspecified
amounts petitioner owed to Great Bank. We believe that the only
settlement charges that can reduce the amount realized from the
sale of the five units are the payments for additional attorney's
fees and title insurance.2 Petitioner has failed to persuade us
2 Expenses incurred in selling property generally reduce the
gain realized. See, e.g., United States v. General Bancshares
Corp., 388 F.2d 184, 187 (8th Cir. 1968) (“selling expenses
incurred in the sale of a capital asset are treated as capital in
nature and chargeable only against the capital proceeds”). We
are satisfied that the payments for additional attorney's fees
and title insurance are expenses incurred in selling the five
units because those charges appear on the settlement statements;
however, the presence on the settlement statements alone of
unspecified amounts petitioner owed to Great American First
Savings Bank does not persuade us that those amounts constitute
expenses incurred in selling the five units.
In addition, it should be noted that appeal in this case
would lie to the Court of Appeals for the Ninth Circuit, and that
circuit may account for the selling expenses incurred on the sale
of the five units by increasing petitioner's adjusted basis, as
opposed to reducing the amount realized. See Kirschenmann v.
(continued...)
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