Charles F. Urbauer - Page 4

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          the petition herein, explained the Commissioner's determination             
          as follows1:                                                                
               It is determined that you are responsible for fifty                    
               (50) percent of the gain on the sale of your personal                  
               residence.  The residence was sold to a 3rd party as                   
               part of the property settlement.  When it was sold you                 
               and your ex-wife held the property as tenants in the                   
               entirety.  Therefore, you are responsible for fifty                    
               (50) percent of the gain and your taxable income is                    
               increased by $82,915.00.                                               
               Section 61(a)(3)2 includes in gross income "Gains derived              
          from dealings in property".  State law determines the property              
          ownership interest of a taxpayer; Federal law controls the tax              
          consequences.  Aquilino v. United States, 363 U.S. 509, 512-513             
          (1960).  Since the property in question, petitioner's principal             
          residence, was located in Michigan, Michigan law is controlling             
          as to ownership of the property.  In accordance with Michigan               
          law, the marital home was held by husband and wife as tenants by            
          the entirety.  Hoyt v. Winstanley, 191 N.W. 213 (Mich. 1922).               
          Moreover, under Michigan law:                                               
               Every husband and wife owning real estate as joint                     
               tenants or as tenants by the entireties shall, upon                    
               being divorced, become tenants in common of such real                  
               estate, unless the ownership thereof is otherwise                      

               1 A copy of the deficiency notice incorporated in the                  
          stipulation of facts contained only a truncated portion of the              
          explanation above, cutting out several inches of the left hand              
          margin, apparently the result of careless photocopying.                     
               2  Unless otherwise indicated, all section references are to           
          the Internal Revenue Code in effect for the year in issue, and              
          all Rule references are to the Tax Court Rules of Practice and              
          Procedure.                                                                  




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