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Petitioners’ Sale of the 116th East Ave. Property
On August 23, 1996, petitioners sold the 116th East Ave.
property for $61,600. Petitioners incurred closing costs of
$10,668 on this sale.
Petitioners’ Federal Income Tax Returns
With respect to the exchange, petitioners reported neither
gain nor loss, nor did they mention the exchange on either their
1994 or 1995 Federal income tax return. On their 1995 Federal
income tax return, petitioners claimed depreciation of $5,186 on
the 116th East Ave. property.2 On their 1996 Federal income tax
return, petitioners claimed a $159,820 loss on the sale of the
116th East Ave. property.
OPINION
A. Petitioners’ Basis in the 116th East Ave. Property
Respondent determined that petitioners’ adjusted basis in
the 116th East Ave. property immediately after the exchange was
$67,500, rather than $147,206, as asserted by petitioners. Using
this redetermined basis, respondent determined that petitioners
are entitled to depreciation deductions with respect to the 116th
East Ave. property of $1,650, rather than the $5,186 that they
2 Apparently, on their 1994 Federal income tax return,
petitioners claimed a $1,512 depreciation deduction with regard
to the 116th East Ave. property. This deduction is not in
dispute here.
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Last modified: May 25, 2011