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Held: Each contract for deed effected a completed
sale for tax purposes in the year of execution, and
income attributable to such disposition must be
recognized and reported for that taxable year.
Held, further, the net operating loss carryovers
claimed by Ps must be adjusted to take into account
income which should have been reported in years
preceding those at issue, for contracts entered during
such prior periods.
Held, further, Baertschi v. Commissioner, 49 T.C.
289 (1967), revd. 412 F.2d 494 (6th Cir. 1969), will no
longer be followed.
William J. White, for petitioners.
Nancy E. Hooten and Mark S. Mesler, for respondent.
OPINION
NIMS, Judge: Respondent determined the following
deficiencies and penalties with respect to petitioners’ Federal
income taxes for the taxable years 1993, 1994, and 1995:
Taxable Income Tax Penalty
Year Deficiency Sec. 6662(a)
1993 $74,925.00 $14,985
1994 127,304.00 25,461
1995 106,261.54 21,252
After concessions, the issues remaining for decision are:
(1) The proper method of accounting for, and timing of
recognition of gain attributable to, sales of property by means
of contracts for deed; and
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