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11,984
Petitioners concede that their 1992 gross income includes $28 of
interest paid by the Alaskan Federal Credit Union and $76 of
interest paid by the Internal Revenue Service. Petitioners
dispute that their 1992 gross income includes the $11,880 of
interest reported on the Form 1099-INT issued to them by NBA.
NBA reported that petitioners were paid $11,880 in interest on an
account (the account) at its bank. Petitioners had opened the
account in 1987 in connection with their sale of a home to Dale
and Kathy Turner on September 10, 1987. Petitioners sold the
home to the Turners for $129,000, and the Turners agreed to pay
petitioners the selling price through monthly installments of at
least $960. The Turners agreed that any outstanding balance owed
to petitioners would bear interest at 10.5 percent per annum.
When petitioners had owned the home, they borrowed money from
Seafirst Mortgage Corp. (Seafirst) using the home as collateral.
When petitioners sold the home to the Turners, petitioners did
not satisfy this debt, which then equaled $98,600, opting to
continue making monthly payments on it. Petitioners' debt to
Seafirst bore interest at 10.5 percent per annum.
The account was an escrow account, and NBA was the
escrowee.2 The Turners agreed to make the monthly payments due
petitioners on the sale directly to NBA in its capacity as
2 Petitioners paid NBA a fee for the services that it
rendered in connection with the escrow account.
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Last modified: May 25, 2011