Bud Raymond - Page 6

                                        - 6 -                                         
          dispositions, however, are not installment sales; therefore, the            
          gains associated with those dispositions cannot be reported under           
          the installment method.  See sec. 453(b)(2)(A).                             
          The Parties’ Disagreements                                                  
               Petitioner and respondent disagree over whether petitioner             
          may use the installment method to report income.  Before we                 
          evaluate whether petitioner is entitled to use the installment              
          method, we deal with petitioner’s assertion at trial that he                
          would have been “lucky” to receive 25 percent of the face value             
          of the promissory notes.  Based on the evidence before us, we               
          have found that petitioner received 41 promissory notes (with a             
          total face value of $423,770) secured by second deeds of trust.             
          Petitioner has not introduced any evidence other than his self-             
          serving testimony indicating that the fair market value of the              
          notes was less than the face value.  Because petitioner has                 
          failed to do so, we conclude that the amount realized includes              
          the total face value of the promissory notes.  See Estate of                
          Silverman v. Commissioner, 98 T.C. 54, 61-62 (1992); McShain v.             
          Commissioner, 71 T.C. 998, 1003-1005 (1979); see also Wood v.               
          Commissioner, 338 F.2d 602, 605 (9th Cir. 1964), affg. 41 T.C.              
          593 (1964); Tokarski v. Commissioner, 87 T.C. 74, 76-77 (1986).             
               Petitioner claims that pursuant to section 453, he is                  
          entitled to defer the gain relating to the sale of the 41 homes             
          until the promissory notes are converted into cash.  Respondent             

Page:  Previous  1  2  3  4  5  6  7  8  9  10  Next

Last modified: May 25, 2011