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Upon consideration of these factors in light of the totality
of the facts and circumstances surrounding the transaction, we
conclude that the conveyance of the Bowmen Lane property was
without substance and had no effect for tax purposes.
Petitioner’s purported purchase of the Bowmen Lane property
did not occur until after Uprite Homes had accepted the Webers’
offer to purchase the property, no money was exchanged, and the
deed was never recorded. Petitioner’s purported purchase and
sale price of $130,000 is almost 20 percent less than the
$160,500 Uprite Homes agreed upon and received from the Webers.
The insurance and utilities for the property remained in the name
of Uprite Homes, and petitioner never moved any of his personal
belongings into the home. Uprite Homes continued to pay the
utilities, and the $698 petitioner “paid” the corporation for
property tax, interest, and insurance on the Bowmen Lane property
was merely a recorded entry in Uprite Homes’ general ledger.
As the purported purchaser and as sole shareholder of the
purported seller, petitioner was on both sides of the
transaction. The facts surrounding the transaction indicate the
parties did not deal at arm’s length. The “sale” was fabricated
solely to facilitate petitioner’s attempt to defer gain on the
sale of the Burns Street property.
Furthermore, the record reflects that petitioner did not use
the Bowmen Lane property as his principal residence as required
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Last modified: May 25, 2011