- 9 -
both having reasonable knowledge of relevant facts.” Gresham v.
Commissioner, 79 T.C. 322, 326 (1982), affd. 752 F.2d 518 (10th
Cir. 1985). The burden is on petitioners to prove that
respondent’s determination of fair market value is incorrect.
See Rule 142(a).
Respondent contends that the fair market value of the 84th
Street property at the time of the conversion (and also on the
date of the exchange) was $134,500. As support for this
position, respondent notes that this was the contract price for
the 84th Street property as specified in the September 2, 1994,
like-kind exchange with Youngblood only a few months after the
conversion. Respondent also notes that the $134,500 figure is
consistent with the gradual downturn in the Tulsa real estate
market from the time petitioners purchased the property in 1982
for $183,000, until it was appraised for $150,500 in October
1992, until it was converted to rental property in 1994.
Petitioners contend that the fair market value of the 84th
Street property was either $217,450–-as reflected in their 1995
Federal income tax return--or alternatively, $200,000.
Petitioners have offered no credible, admissible evidence,
however, to support either of their alternative positions.6
6 At trial, petitioners’ tax return preparer, Mr. Patrick
Walters (Walters), testified that in preparing petitioners’ tax
returns, he had relied on information from an appraiser regarding
the value of the 84th Street property. At trial, Walters’
(continued...)
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