Kenneth L. Musgrave and Etta D. Musgrave - Page 3




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            title to the property.  The Church had full rights to enter upon                           
            and to enjoy the property.  In addition, the contract for deed                             
            provided the Church would:  Insure all improvements on the                                 
            property with loss payable to petitioners, keep all improvements                           
            in good repair and condition, assume and pay all taxes on the                              
            property, and keep the improvements on the property occupied.                              
            When the entire purchase price had been paid by the Church,                                
            petitioners were required to convey the legal title of the                                 
            property to the Church.  The contract for deed prohibited the                              
            Church from assigning, selling, pledging, or mortgaging the                                
            property without petitioners' consent.  The contract for deed                              
            specified, in part, that if the Church was in default in the                               
            payments, petitioners could elect to declare the entire unpaid                             
            indebtedness to be due and payable and enforce collection or to                            
            declare the contract canceled.3  As long as the Church made                                
            prompt payments on the indebtedness, the Church had the right to                           
            occupy the property.                                                                       
                  Petitioners claimed a charitable contribution deduction on                           
            their 1994 Federal income tax return for the difference between                            
            the property’s $450,000 fair market value and its $152,500                                 
            selling price.  A part of the deduction was carried over to their                          
            1995 income tax return.  Respondent's deficiency determinations                            

                  3The provision required written notice of default to be                              
            given to the Church and allowed a grace period of 15 days to cure                          
            the default before petitioners could exercise their rights.                                





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