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Anthony quitclaimed to petitioner his interest in the Compton
residence.
In February 1994, petitioner was transferred by her employer
to Kansas City, Missouri. The same month, the Compton residence
was appraised for Sumitomo Bank; its value was estimated to be
$135,500. In March 1994, petitioner borrowed $100,000 from
Sumitomo Bank, granting a deed of trust against the Compton
residence in favor of the bank. On or about May 12, 1994,
petitioner purchased a residence in Lee’s Summit, Missouri, for
$97,600.
Petitioner began renting the Compton residence following her
employment transfer. Petitioner started attempting to sell the
residence at least as early as August 1995, when she entered into
an agreement with a real estate agent. She finally sold the
residence on September 27, 1996, for $119,000, incurring expenses
of $16,852.
Petitioner filed Form 2119, Sale of Your Home, with her
Federal income tax return for taxable year 1996. She reported
gain of $3,255 on this form, but did not include this amount in
gross income. Respondent issued petitioner a statutory notice of
deficiency reflecting his determination that petitioner had
unreported long-term capital gain of $49,297 from the sale of the
Compton residence.
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