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5. Taxes on the W. 22d Property
Hagan paid the delinquent county taxes on the W. 22d
property for 1987, 1988, and 1989. Petitioners paid the county
taxes on the W. 22d property for January 1990 at settlement.
6. Petitioners' Improvements to and Sale of the W. 22d
Property
In 1989, Mr. Blanton spent a substantial amount of time
creating architectural drawings for the renovation of the W. 22d
property. Petitioners did not begin to make substantial
renovations until 1990. Petitioners kept detailed records of
their improvements to the W. 22d property in 1990, 1991, and
1992. Petitioners spent $42,225.46 in 1990, $63,838.02 in 1991,
and $9,730.49 in 1992 to renovate the W. 22d property.
Petitioners included the amounts they paid in 1990, 1991, and
1992 to renovate the W. 22d property in their cost basis in the
Spokane property. Petitioners did not include any amounts they
paid in 1989 in their cost basis in the Spokane property.
Petitioners lived in the W. 22d property until they sold it
on October 30, 1992, for $485,000. They incurred selling
expenses of $38,825. Their cost basis in the W. 22d property was
$302,302. They realized gain of $143,873 on its sale, calculated
as follows:
Sale price of W. 22d property $485,000
Less adjusted cost of W. 22d property 302,302
Less expenses of sale 38,825
Gain on sale of W. 22d property 143,873
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