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construct a house on the Big Sur property. The house was
completed in August 1994, and petitioners commenced using it as a
rental property.
In the meantime, on March 16, 1993, petitioners sold the
Pacific Grove property to Allen and Marla Elvin (the Elvins) for
$228,668. The Elvins entered into an agreement with petitioners
whereby, upon the closing of a Chicago Title Company escrow
account, the money consideration for the Pacific Grove property
would be deposited into an account that petitioners opened at
Provident Central Credit Union for this purpose. After the sales
proceeds were deposited, petitioners directed Provident Central
Credit Union to make payments by cashier’s check to contractors
hired to make improvements on the Big Sur property. In addition,
petitioners directed Provident Central Credit Union to reimburse
petitioner husband for the downpayment on the Big Sur property
and for expenses incurred to improve it. Statements from the
Provident Central Credit Union account were sent directly to
petitioners’ home address. Petitioners had sole authority to
withdraw funds and make payments from the account.
Petitioners did not report any gain on the sale of the
Pacific Grove property on their joint 1993 Federal income tax
return, nor did their return include a Form 8824, Like-Kind
Exchanges.
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Last modified: May 25, 2011