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Petitioners' 1993 return includes a Form 8824, Like-Kind
Exchanges, which states that petitioners exchanged “land and
building” for “land and building”. The return discloses no other
facts regarding the transactions between petitioner and WLC.
Respondent used petitioner’s $59,831 adjusted basis figure
for the McDonald Street property in computing the long-term
capital gain on the sale of the McDonald Street property
determined in the deficiency notice. However, on audit of
petitioners’ return, an adjusted basis of $61,331 had been
established. Respondent’s deficiency notice did not back out the
gain petitioners had reported on petitioner’s quitclaim transfer
of the unimproved Lawrence Drive property to WLC, notwithstanding
that, under respondent’s theory of the case, the Lawrence Drive
property has never been disposed of by petitioner.
On April 29, 1998, Bank One, Green Bay, WLC, and petitioner
executed an amendment to the Assumption, Release and Escrow
Agreement. The amendment recites that the original of that
agreement contained a scrivener’s error, and recites that WLC
would pay petitioner $142,400 “in satisfaction of the Note and
Mortgage” on the Lawrence Drive property, that the Lawrence Drive
Property “is exchanged per the Exchange Agreement” for the
McDonald Street property, that petitioner will use $100,000 of
the $142,400 received from WLC to pay petitioner’s $100,000 note
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