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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)
2(...continued)
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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