- 5 - During 1996, petitioners were audited by one of respondent's agents. The auditor requested information from petitioners with respect to the sale of their Mequon residence. On September 16, 1996, petitioners provided Form 2119 and Form 4797, Sales of Business Property, to the Internal Revenue Service auditor assigned to their case. However, petitioners did not execute either form. Notice of Deficiency In the notice of deficiency, respondent determined that the capital gain petitioners received from the sale of their Mequon residence was includable in their 1993 income. Respondent calculated petitioners' capital gain in the following manner: Personal Business Total 83% 17% Sale price $270,000 $224,100 $45,900 Add: Depreciation allowed 4,913 --- 4,913 Less: Adjusted basis in (213,582) (177,273) (36,309) property Selling expenses (21,191) (17,588) (3,603) Capital gain on sale of property 40,140 = 29,239 + 10,901 OPINION Issue 1. Gain From Sale of Home The first issue is whether petitioners must include as income the capital gain realized from the sale of their Mequon residence in 1993. Respondent maintains that because petitioners failed to satisfy the requirements of section 1034, they should have reportedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011