- 7 - Petitioner reported all three sales on the 1988 return using the installment method of accounting. In 1989, petitioner sold the notes referred to in the preceding two paragraphs (the Holland Spring notes) to Herland Finance, Ltd. (Herland), receiving “approximately” $2.5 million in cash. At the time of that sale, petitioner’s total basis in the Holland Spring notes was $2,724,451. OPINION I. Introduction Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States and, to the extent provided in sections 871(b) or 877(b), on the income of a nonresident alien. In pertinent part, section 897(a) provides that gain or loss of a nonresident alien individual from the disposition of a U.S. real property interest shall be taken into account under section 871(b)(1). The parties agree that, for 1987 and 1988, petitioner was a resident of the United States and that, for 1989, he was a nonresident-alien individual. Respondent determined a deficiency in petitioner’s 1989 Federal income tax on the basis that petitioner had failed to report total capital gain income of $17,248,184 arising from the disposition in 1989 of the 1987 Ampel notes to Floridama and Holland Spring notes to Herland. Respondent determined, at least with respect to the disposition of the 1987 Ampel notes, that petitioner’s gain arose “from the sale of United States realPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011