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1. Timing
Petitioner offers two arguments why gain from the sale
should not be recognized in 1990. First, petitioner asserts that
the Kiddies 38/91 partnership’s $174,900 payment to Farm & Grove
for the 53 lots was contingent upon County Bank’s reducing
petitioner’s debt to the bank by $174,900 or $3,300 per lot.
According to petitioner, when County Bank refused to transfer the
debt obligation to the partnership, payment was treated as a
contingent sale from resales starting in 1991. We find no such
language in the sales agreement.
Consideration for the transfer consisted of $174,900 ($3,300
per lot) through the assumption of debt,19 plus $1,374 per lot to
be paid upon the sale and/or hypothecation of the existing
mortgage on those lots. Nothing in the agreement indicates that
the transfer was contingent upon County Bank’s reducing
petitioner’s debt by $174,900. Rather, the agreement explicitly
provides that consideration for the transaction was to be paid by
the partnership to petitioner and Farm & Grove. The attached
Mortgage Deed and note, while not executed, provides further
evidence that the agreement was not contingent upon County Bank’s
reducing petitioner’s debt by $174,900. Farm & Grove and
petitioner were named as parties on the Mortgage Deed and on the
19This amount is the same amount that was required to
release a lot from the County Bank mortgage lien.
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