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Mr. Dies contacted Mr. Frederick to ask him whether he (Mr.
Frederick) had threatened Mr. Wickersham with condemnation. Mr.
Frederick replied that he had threatened Mr. Wickersham. Mr.
Dies then called Mr. Wells and told him that he (Mr. Dies) would
draft a letter to reflect what Mr. Frederick had told him (Mr.
Dies). Mr. Dies signed the letter he drafted (Mr. Dies' letter
of condemnation), and it was given to Mr. Wickersham at the
closing on the Peveto.
Petitioners' 1989 Tax Return
Petitioners timely filed a joint individual Federal income
tax return for 1989 (1989 return). Ms. Whitfield prepared the
1989 return.
Before Ms. Whitfield's preparation of the 1989 return, Mr.
Wickersham told Ms. Whitfield that he had sold the Peveto under
threat of condemnation. After learning of this, Ms. Whitfield
researched the deferral of gain under section 1033. After
researching the issue, she called Mr. Wickersham and told him
that she needed confirmation of the threat of condemnation. Mr.
Wickersham gave Ms. Whitfield Mr. Dies' letter of condemnation.
Ms. Whitfield relied on Mr. Dies' letter of condemnation to
prepare the 1989 return. On the 1989 return, petitioners fully
disclosed the transaction between the OCPND and Mr. Wickersham
involving the Peveto. Ms. Whitfield did not include the gain
from the sale of the Peveto in petitioners' income on the 1989
return. Instead, she prepared a statement entitled "Supplemental
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