Violet A. Reynolds - Page 14

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          to 3:00 p.m. * * * at various places including * * * a girl                 
          friend's apartment and hotels where [he] was staying."  He paid             
          her living expenses, plus $200 a week, and he provided her with             
          money for other things, such as investing, decorating her                   
          apartment, and buying a car.  We held that none of the more than            
          $100,000 that he gave her over the 5 years was taxable to her.              
          We concluded that she received the money as a gift.  We reached             
          this conclusion notwithstanding the fact that the woman had                 
          stated that she "earned every penny" of the money.                          
               Given our conclusion in this case that petitioner received             
          her interest in the property as gifts from Mr. Kent, her basis in           
          the property equals Mr. Kent's basis immediately before the                 
          gifts, to the extent that his basis is attributable to the gifted           
          property.9  Sec. 1015(a).  Although the record does not indicate            
          with mathematical specificity the amount of Mr. Kent's basis that           
          passed to petitioner as a result of the gifts, we are satisfied             
          from the facts at hand that her basis equaled or exceeded the               
          amount that she realized on the sale; i.e., $153,500.10  We                 
          conclude that petitioner had no gain to recognize upon receipt of           
          the disputed payment.                                                       

               9If petitioner were claiming (which she is not) that she had           
          realized a loss on her disposition of any of the gifted property,           
          her basis in that property would equal the lesser of Mr. Kent's             
          basis at the time of the gift or the property's fair market value           
          at that time.  Sec. 1015(a).                                                
               10In fact, we do not think it unreasonable to conclude that            
          petitioner's basis in the house and boat equaled or exceeded                

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