Violet A. Reynolds - Page 1

                                 T.C. Memo. 1999-62                                   

                               UNITED STATES TAX COURT                                

                          VIOLET A. REYNOLDS, Petitioner v.                           
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 5708-97.                  Filed March 4, 1999.              

                    P and H cohabited for 24 years, H earning the                     
               income and P primarily taking care of the household.                   
               After H terminated the relationship, H sued P for                      
               ejectment, trespass, and conversion, praying in his                    
               complaint mainly for a judgment stating that P had no                  
               interest in property that was purchased during their                   
               relationship.  P, in her answer, alleged that she had                  
               an equitable interest in the property.  H, in                          
               settlement of the lawsuit, generally agreed to pay P                   
               $153,500 to perfect his sole ownership of all the                      
               property.  R determined that the portion of the                        
               settlement that P received during the subject year was                 
               paid to her as compensation for the homemaking services                
               that she provided during the relationship.                             
                    Held:  H paid P the disputed amount in                            
               satisfaction of her interest in the property, an                       
               interest that she had received as a gift from H during                 
               their relationship.  Because P's basis in the property                 
               is greater than the settlement amount, none of the                     
               disputed amount is income to her.                                      

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