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flooring, repaired drywall, and painted the interior and exterior
of the house.
Around October 1994, petitioners decided to sell the Belair
property regardless of market conditions. Petitioners listed the
Belair property with Jack White Realty for $275,000. Within 1
week, petitioners received a full-price offer. On December 5,
1994, the sale closed. The settlement sheet for the sale of the
Belair property reflected that the purchasers paid an extra
$499.98 for 1-week’s early occupancy.
Petitioners never placed a sign in front of the Belair
property nor ran any newspaper advertisements listing it for
rent. Furthermore, the renovation of the Belair property
prevented it from being rented. By the time petitioners could
have rented the Belair property, petitioners had decided “to get
rid of” the Belair property. Petitioners never rented the Belair
property, and it remained unoccupied until the new owners moved
in on or about November 29, 1994.
In December 1994, petitioners met with their tax accountant,
Fred M. Strand, to discuss their tax liability for 1994.4 Mr.
Strand and petitioners discussed the sale of the Belair property,
and Mr. Strand’s opinion was that they had converted the property
4 For more than 10 years, petitioners met with their tax
accountant at the end of the year to help prepare their taxes for
that year.
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Last modified: May 25, 2011