Donald DeCleene and Doris DeCleene - Page 31

                                       - 31 -                                         

          property must be disregarded as having no tax significance                  
          because, at the end of the day, petitioner ended up where he                
          started, with title to and beneficial ownership of the Lawrence             
          Drive property.9                                                            
          Computational Questions                                                     
               Petitioners point out that respondent’s deficiency notice,             
          which made an upward adjustment of $82,569 in long-term gain                
          realized and recognized by petitioners on the disposition of the            
          McDonald Street property, which we have found to be the actual              
          sale, failed to back out the short-term gain of $5,373 that                 
          petitioners reported on the transfer of title to the unimproved             
          Lawrence Drive property.  Petitioners’ point is well taken.  It             
          should be addressed in the Rule 155 computation.                            
               Similarly, other matters not completely resolved, such as              
          the calculation of additional costs paid by petitioner in                   
          connection with the sale of the McDonald Street property, as well           
          as his adjusted basis in that property, should be addressed in              
          the Rule 155 computation of the gain on the sale.                           
          Penalty Question                                                            
               The subject transactions were structured by petitioner’s               
          accountant and attorneys after petitioner presented them with the           

          9 In so doing, the subject transactions satisfy the                         
          requirements for application of what the Court of Appeals for the           
          Seventh Circuit has characterized as the most restrictive and               
          rigorous version of the step-transaction doctrine:  the binding             
          commitment test.  McDonald’s Restaurants, Inc. v. Commissioner,             
          688 F.2d 520, 525 (7th Cir. 1982), revg. 76 T.C. 872 (l981).                

Page:  Previous  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  Next

Last modified: May 25, 2011