Douglass H. and Suzanne M. Bartley - Page 21

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          a dollar is what Congress says it is, without regard to intrinsic           
          value or lack thereof"), affd. without published opinion 578 F.2d           
          1383 (8th Cir. 1978); Notter v. Commissioner, T.C. Memo. 1982-96.           
          Accordingly, we dismiss petitioners' argument with regard to the            
          effect of inflation.                                                        
               Finally, petitioners argue that because section 1034 does not          
          apply to losses, there is "disparate treatment" between homeowners          
          and businesses.  We recognize that because a residence is, by               
          definition, for personal use, a loss incurred on its sale is not            
          deductible.  See secs. 165, 262.  However, a loss is recognizable           
          on the sale of a home if it was converted to rental property prior          
          to its sale.  See sec. 165(c).                                              
               Although petitioners' nominal gain may or may not equal their          
          real gain in an economic sense, neither the Constitution nor tax            
          laws "embody perfect economic theory".  See Weiss v. Wiener, 279            
          U.S. 333, 335 (1929).                                                       
               d.  Conclusion                                                         
               On the basis of the foregoing analysis, we hold that the gain          
          realized from the sale of petitioners' Mequon residence is taxable          
          in 1993.  Moreover, respondent's computation of gain is sustained.          
          Issue 2.  Section 6662(a) Accuracy-Related Penalty                          
               The second issue is whether petitioners are liable for the             
          section 6662(a) accuracy-related penalty for negligence.  Section           
          6662 imposes an accuracy-related penalty for negligence and                 

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