John M. Schaefer - Page 18

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          D.   Whether Petitioner Failed To Report Capital Gains in 1992              
               Petitioner reported capital gains totaling $11,965 on                  
          Schedule D of his 1992 return.  Respondent determined that                  
          petitioner had capital gains of $30,760 for 1992.                           
               1.   Walden Agreement                                                  
               Petitioner testified that he had an oral agreement with                
          Floyd A. Walden (Walden), who he described as a retired bank                
          manager and a stock market expert, under which 50 percent of his            
          capital gain was income to and reportable by Walden.  Petitioner            
          did not offer any documentary evidence that he had an agreement             
          with Walden, or evidence that Walden reported any of his alleged            
          share of the gain in 1992.  Walden did not testify.  Petitioner             
          did not establish that any of the $30,760 of capital gain was               
          taxable to Walden.  We sustain respondent's determination.                  
               2.   Brentwood Apartments                                              
               Petitioner bought the Brentwood Apartments around 1990 for             
          $80,000.  He took $4,000 of depreciation per year for 2 years.              
          Petitioner sold the Brentwood property in 1992 for $190,000.                
          Respondent determined that petitioner failed to report gain of              
          $122,000 [$190,000 - ($80,000 - $12,000)] (3 years of                       
          depreciation).                                                              











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