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12 parcels of unimproved real property located in Hernando,
Citrus, Volusia, and Marion Counties, Florida (the 12 parcels).
Ampel Corporation, Ltd. (Ampel), is a British Virgin Islands
corporation. In December 1987, Ampel purchased the 12 parcels
from petitioner. Ampel agreed to pay a total of $21 million for
the 12 parcels. Petitioner received no cash from Ampel at the
time of sale, but he received 12 notes from Ampel, in various
amounts, one for each property, evidencing Ampel’s obligation to
pay the $21 million purchase price in installments, with interest
(the 1987 Ampel notes). The 1987 Ampel notes are similar (at
least 11 are; one, inexplicably, is not in evidence), all calling
for both interest and principal payments beginning in January
1989. A mortgage secures each note. Petitioner reported the
sale of the 12 parcels on the 1987 return. He reported that sale
under the installment method of accounting. He reported a
selling price of $21 million, an adjusted basis of $6,751,500,
commissions and other expenses of sale of $189,365, and no
payment in 1987.
Ampel did not make the 1989 payments to petitioner called
for in the 1987 Ampel notes.
Floridama Finance, Ltd. (Floridama), is a British Virgin
Islands corporation formed on February 24, 1989. On March 2,
1989, Floridama purchased the 1987 Ampel notes from petitioner.
Floridama agreed to pay a total of $19,501,158.56 for the 1987
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