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Hewitt for specific performance under the earnest money contract.
Mr. Hewitt filed a cross-claim against Lomas Mortgage and
petitioners, alleging a conspiracy to deprive him of the Foxbriar
property and seeking back rental payments for petitioners’
occupancy thereof.
The District Court heard the case and later issued an
opinion and judgment in which the District Court held that "Under
Texas law, * * * [petitioners had] no valid interest in the
[Foxbriar] property which would have attached before the tax lien
was filed."7 United States v. Blanche, supra. In other words,
the District Court held that petitioners had no legal or
equitable title to the Foxbriar property during 1991 and 1992.
Respondent contends that this holding by the District Court
precludes petitioners from asserting deductions in this case that
would depend upon petitioners' having an ownership interest in
the property.
On their 1991 Federal income tax return, petitioners claimed
on Schedule A, Itemized Deductions (Schedule A), deductions of
$2,370 for real property taxes and $5,372 for mortgage interest
in connection with the Foxbriar property. Additionally, on Form
7 The District Court did, however, award petitioners
$29,935.31 as restitution for improvements and repairs made to
the Foxbriar property as well as for amounts paid to cure the
mortgage default in 1992. That award, however, was based on
unjust enrichment and was not based on petitioners' having an
ownership interest in the property.
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