Michele Anthony - Page 8

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          interest which is deemed to have been sold to her.  See id.; sec.           
               Respondent, assuming the division of property upon divorce             
          was an equal but taxable division, made the following                       
          determination of the amount of gain on the sale of the Compton              
                    Selling price                 $119,000                            
                    Selling expenses              (16,852)                            
                    Adjusted basis                 (52,851)                           
                    Gain on sale        49,297                                        
          Respondent’s computation of the adjusted basis can be summarized            
          as follows.  First, respondent computed Mr. Anthony’s share of              
          the value of the home at the time of the divorce.  Using the                
          purchase price in 1973 of $29,900 and the appraised value in 1994           
          of $135,500, respondent computed yearly appreciation of $5,029              
          over the 21-year period.  Respondent then computed the value at             
          the time of the divorce in 1984 to be $85,219 (purchase price               
          plus 11 years appreciation), and thus Mr. Anthony’s share to be             
          $42,610.  Second, respondent computed petitioner’s adjusted basis           
          as follows:                                                                 
               Petitioner’s share of purchase                                         
               price (� of $29,900)                         $14,950                   
               Mr. Anthony’s share of value at divorce        42,610                  
               Depreciation allowed in 1994-1996            (4,709)                   
               Adjusted basis                          52,851                         

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