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$2,002, and an accuracy-related penalty under section 6662(a) in
the amount of $2,670.
After concessions,2 the issues for decision are as follows:
(1) Whether petitioners must recognize long-term capital gains
from the foreclosure sale in 1991 of two parcels of real property
held by them; (2) whether petitioners are entitled to a deduction
for ordinary losses for their equity interests in the properties
sold by foreclosure in 1991; (3) whether petitioners are liable
for an addition to tax under section 6651(a)(1); and (4) whether
petitioners are liable for an accuracy-related penalty under
section 6662(a) for substantial understatement of tax.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference.
At the time the petition was filed, petitioners resided in
Chicago, Illinois. In 1991, petitioners owned two rental income
properties that they had owned for more than 1 year. These
properties were located in Chicago, Illinois, at 5335 South
Honore (Honore property) and 7332 Campbell (Campbell property).
In 1991, petitioners' adjusted basis for the Honore property
was $32,963, and they were personally liable for a mortgage on
1(...continued)
Procedure.
2 Petitioners did not contest and are therefore deemed to
have conceded respondent's determination that they had additional
interest income in 1991. Rule 34(b)(4).
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