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reported assets in excess of liabilities of $442,480. The
partnership also reported ordinary income of $48,072.84 and
$91,092 on its 1990 and 1991 Forms 1065, respectively.
B. Discussion
Respondent asserts that petitioner realized $216,524.6117 of
gain on the transfer of 53 lots from Farm & Grove to the Kiddies
38/91 partnership in 1990.18 Petitioner argues that either gain
from the transfer should be recognized in a year subsequent to
1990 or, in the alternative, no gain at all should be recognized.
We address petitioner’s arguments in turn.
17Gain on the transfer was calculated by subtracting Farm &
Grove’s basis in the 53 lots from the purchase price. Farm &
Grove paid $317,272 to acquire the 539-lot parcel which included
the 53 lots whose equitable interest was transferred to the
Kiddies-CKE 38 partnership. Respondent assumed that the lots
were equal in value, and petitioner has not asserted otherwise.
Thus, Farm & Grove’s basis in the 53 lots whose equitable
interest was transferred was $31,197.39 or $588.63 per lot.
Respondent calculated the purchase price by adding the
amount Farm & Grove was to eventually receive upon the sale of
each lot to third parties ($1,374 x 53 lots = $72,822) to the
amount required for the release of the County Bank mortgage lien
($174,900). According to respondent, the total amount received
by Farm & Grove was $247,722 ($72,822 + $174,900 = $247,722).
Therefore, respondent calculated petitioner’s gain on the
transfer to be $216,524.61 ($247,722 - $31,197.39 = $216,524.61)
18The notice of deficiency determined gain of $215,922.
According to respondent, the difference between the $216,524.61
gain asserted on brief and the $215,922 used in the notice of
deficiency is attributable to rounding. Originally, respondent
rounded the price per lot paid by Farm & Grove for the
acquisition of the lots up from $588.63 to $600 (53 x $600 =
$31,800) and ($247,722 - $31,800 = $215,922).
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