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In August 1991, petitioner sold the Ranch for $200,000,
taking a promissory note for $150,000 and the remainder in cash.1
In October 1992, petitioner assigned this promissory note to a
bank for $167,342.82 cash.
The Note
In May 1992, Youngs was preparing petitioner's 1991 tax
return. When attempting to calculate petitioner's gain or loss
on the sale of the Ranch, she realized there was no note with
respect to the transfer of the Ranch. She raised this point with
Eagleson, who said he would prepare a note. In May 1992,
Eagleson prepared a promissory note (the Note) with respect to
the transfer, and in June 1992, petitioner executed it.
The date appearing in the top right corner of the Note
executed in June of 1992 was July 2, 1990, which was the date of
the transfer of the Ranch. The Note listed the Ranch as
security, stating that "payment of this note is secured by that
tract of land [i.e., the Ranch] * * * more fully described in the
Deed executed on this date, July 2, 1990." There was no date
next to petitioner's signature at the end of the Note. The Note
called for annual payments beginning July 2, 1992.
The Audit
Guerra next became significantly involved with the details
of the transfer of the Ranch in July 1993, when an audit of Paz
1 Settlement expenses were $13,873.70 and taxes were
$1,568.32, so petitioner received net cash of $34,557.98.
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