Salvador A. and Kathleen M. Gaudiano - Page 11

                                       - 11 -                                         

                    3.  Other Factors                                                 
               The parties failed to present evidence regarding which party           
          bore the risk of loss or damage to the equipment.  Under the                
          agreement, Four A had a present obligation to convey title to               
          Black Mountain (as noted above), and Black Mountain had a present           
          obligation to make production payments to Four A in order to                
          retain the equipment.  Additionally, Black Mountain had                     
          possession of the equipment.  Black Mountain was required to                
          return the equipment to Four A if it stopped making production              
          payments and failed to pay the remaining balance due under the              
          agreement.                                                                  
                    4.  Conclusion                                                    
               Based on our review of the relevant Grodt & McKay Realty               
          factors, we conclude that the transaction concerning the                    
          equipment constituted a sale by Four A.                                     
               B.  Amount Realized From the Sale                                      
               On Four A's Form 1120S for 1993, Four A reported the amount            
          realized on the sale of the equipment as $445,000.  In 1996, Four           
          A filed an amended Form 1120S that reported the amount realized             
          on the sale as $143,430.  This increased Four A's section 1231              
          loss to $574,576.  Petitioners filed Forms 1040X seeking refunds            
          for 1993 based on Four A's increased section 1231 loss.3                    

               3 We note that petitioners never received any response from            
          respondent regarding their amended Forms 1040X and that this                
                                                             (continued...)           




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011