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In the notice of deficiency, respondent determined that
petitioner realized a gain of $102,728 on the sale of the 17
acres of the Tryon Road property as calculated below:
Sales price $175,018.13
Selling charges ( 4,756.51)
Adjusted sale price $170,261.62
Purchase price $ 65,092.99
Logging permit 50.00
Surveys 2,369.00
Adjusted basis $ 67,511.99
Preliminary gain $102,749.63
Other 21.63
Adjusted gain on sale $102,728.00
Reported loss on sale ($ 453.59)
Proposed adjustment $102,274.41
Section 1041(a)(2)
Section 1041(a)(2) provides for nonrecognition of gain or
loss on a transfer of property from an individual to a former
spouse provided that the transfer to the former spouse is
incident to the divorce.2 For a transaction to be considered
2 Although section 1041 applies to both spouses and former
spouses, only “former spouse” will be used in the discussion of
the statute.
SEC. 1041. TRANSFERS OF PROPERTY BETWEEN SPOUSES OR
INCIDENT TO DIVORCE.
(a) General Rule.--No gain or loss shall be
recognized on a transfer of property from an individual
to (or in trust for the benefit of)--
(1) a spouse, or
(2) a former spouse, but only if the transfer
is incident to the divorce.
(continued...)
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Last modified: May 25, 2011