- 33 -
Having concluded that the FMV of the Property as of the date
of sale was $528,233, it follows that the Laniers are in receipt
of a constructive dividend in the amount of $103,233 (FMV less
purchase price), and we so hold. Secs. 301(c), 316(a); sec.
1.301-1(j), Income Tax Regs.
Finally, we note that Robertson testified that he chose the
book value of the Property as the selling price on the
Corporation's 1987 return as an "administrative shortcut."
Robertson opined
The difference in the selling price between the book
value and the--whatever it actually sold for was put
into other income in connection with the sale of the
whole business. It had not one penny's effect on
taxable income, the bottom line, or the income tax due.
Absolutely none.
However, Robertson could not point out where the difference was
purportedly taken into income on the Corporation's return.
Consequently, petitioners have failed to convince the Court, as
is their burden, that the Corporation has already taken into
income on its 1987 return the $1,523 difference between the sale
price of $425,000 and its adjusted basis in the Property. Rule
142(a). Therefore, we hold that the Corporation must recognize
income in the amount of $104,765 (FMV less the Corporation's
adjusted basis). Sec. 311(b)(1). The Corporation may apply its
1989 net operating loss of $24,370 in its entirety in order to
partially offset its 1987 taxable income. Sec. 172.
Page: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 NextLast modified: May 25, 2011