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On September 4, 1990, petitioner and his ex-wife sold the
marital home for $280,000. In contemplation of the sale, they
entered into a "Stipulation to Amend Judgment of Divorce
Regarding Tax Payment". This stipulation provides in relevant
part:
1. That the sale of the marital home did not produce
sufficient monies to pay the tax liabilities or
potential tax liabilities set forth in the judgement
[sic].
* * * * * * *
3. That item Fifth on page 6 is reduced to an escrow
fund of $54,000--the anticipated capital gains taxes on
the sale of the residence.
4. That the net proceeds of the sale of the property--
$14,551.91 shall be divided between the parties as
follows:
Kim U. Urbauer $10,913.94
Charles F. Urbauer 3,637.98
The division of the $14,551.91 between Kim and petitioner was on
a 75/25 basis. The stipulation was signed by both parties and
dated September 4, 1990. However, the $54,000 in the escrow fund
was not used to pay the income tax on the capital gain of the
marital home.
On January 12, 1995, the Commissioner issued a notice of
deficiency to petitioner which determined that petitioner was
liable for 50 percent of the tax on the gain from the sale of the
principal residence. The deficiency notice, which accompanied
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