Shizuo George Kurata - Page 8

                                                - 8 -                                                 
            that unspecified amounts owed to Great Bank constitute settlement                         
            charges that properly reduce the amount realized from the sale of                         
            the five units; indeed, petitioner has not produced any evidence                          
            on that issue.  In sum, we find that the sale of the five units                           
            produced settlement proceeds of $210,500 and settlement charges                           
            of $2,479.                                                                                
                  Therefore, the amount realized by petitioner on the sale of                         
            the five units is $205,114, and the gain realized is $103,264.                            
            The adjustment to petitioner's gross income that is in issue is                           
            $103,264, and, after making a negative adjustment for the                                 
            undisputed operating loss carryover, $91,352 is the adjustment to                         
            petitioner's taxable income that is in issue.  Those calculations                         
            are as follows:                                                                           
            Purchase price        $228,067            Settlement proceeds  $210,500                   
            Capital expenditures     3,266            Legal costs            (2,907)                  
            Depreciation          (129,483)           Settlement charges     (2,479)                  
            Adjusted basis         101,850            Amount realized       205,114                   
                  Amount realized                                 $205,114                            
                 Less adjusted basis                     (101,850)                                   
                  Equals gain realized                     103,264                                    
                  Adjustment to gross income in issue      103,264                                    
                  Operating loss carryover                 (11,912)                                   

            Commissioner, 488 F.2d 270 (9th Cir. 1973), revg. 57 T.C. 524                             
            (1972).  We believe, however, that we need not address whether                            
            selling expenses properly reduce amount realized or increase                              
            adjusted basis because, under either approach, the gain realized                          
            by petitioner in the present case would be the same amount.                               
            Since the parties agree on the figure for petitioner's adjusted                           
            basis in the five units, we shall, purely for convenience, not                            
            disturb that figure and adjust the amount realized for the                                
            expenses incurred on the sale of the five units.                                          

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