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Respondent determined a deficiency of $11,032, an addition
to tax pursuant to section 6651(a)(1) of $2,757, and a penalty
pursuant to section 6662(a) of $2,206 with respect to
petitioners’ 1994 Federal income tax. After a concession by
petitioners,2 the issues for decision are: (1) Whether
petitioners are entitled to deduct a loss pursuant to section 165
on the sale of their former residence in 1994; and (2) whether
petitioners are liable for the accuracy-related penalty for 1994.
Some of the facts have been stipulated and are so found.
The stipulation of facts, the supplemental stipulation of facts,
and the attached exhibits are incorporated herein by this
reference. At the time they filed the petition, petitioners
resided in Wasilla, Alaska.
Background
In 1983, petitioners purchased a house located at 2041
Belair Drive in Anchorage, Alaska (the Belair property), for
$295,000. From August 1983 to May 1994, petitioners’ principal
residence was the Belair property.
In December 1993, petitioners purchased approximately 151
acres of land in Wasilla, Alaska (the Wasilla property).
On February 24, 1994, petitioners listed the Belair property
for sale with Fortune Properties (Fortune). Petitioners’ real
2 In their reply brief, petitioners concede that they are
liable for the addition to tax pursuant to sec. 6651(a)(1).
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Last modified: May 25, 2011