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property to Haq.7 Petitioners observe that these irregularities
are not satisfactorily explained by evidence in the record. Such
irregularities, however, are peculiarly within petitioners’
province to explain, and they have failed to do so. Accordingly,
we hold that petitioners sold the Danville property to Haq in
1992 and must include in taxable income capital gain realized
with respect to this sale.
On reply brief, petitioners indicate that, in the event this
Court concludes that they sold the Danville property in 1992,
their only disagreement with respondent’s calculation of the
amount of capital gain is with respect to their basis in the
Danville property. They argue that the basis as allowed by
respondent should be increased by $641 to reflect amounts
expended for concrete for improvements at the Danville property.
On this point, we agree with petitioners. We find that
petitioners have adequately substantiated the $641 cost of
concrete, and we hold that this amount is properly includable in
the basis of the Danville property for purposes of calculating
7 Petitioners make much of the fact that the grant deed
indicates a documentary transfer tax of only $68.20, which they
contend would reflect value transferred of $62,000. We note,
however, that the grant deed on its face indicates that the
transfer tax was computed on the basis of consideration received
less liens or encumbrances at the time of sale. The evidence
shows that the sales price of the Danville property was $400,000,
and that petitioners’ mortgage on the Danville property, in the
principal amount of $338,000, remained in place after the
transfer to Haq. Accordingly, we find no irregularity with this
particular circumstance; indeed, it tends to bolster respondent’s
position.
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