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Property contained approximately 274 acres, comprising three
tracts acquired by petitioners between 1966 and 1977. Two houses
were located on the Robertson Property for which petitioners
received rental income during the years in issue. The Cheatham
Property also had a house from which petitioners received rental
income. The Sumner Property consisted of two tracts, acquired
from Dr. Burrus’s mother between 1975 and 1983: an approximately
51-acre tract held by the Cardiovascular Surgery Associates, P.C.
Money Purchase Pension Trust4 and an approximately 10-acre tract
held by petitioners personally. Petitioners’ residence during
the years in issue was located in Nashville, although there was a
one-bedroom apartment affixed to a barn on the Cheatham Property
where petitioners or family members occasionally stayed
overnight.
The Cheatham Property was purchased by FBHR in 1980 for
$606,000, and sold to Dr. Burrus in late 1989 for an effective
price of $1,636,106. Appraisals obtained by petitioners for
purposes of trial estimated the Robertson Property’s value at
3(...continued)
leasing houses on the Robertson Property. On their returns,
petitioners reported the results of these activities separately
from the results of FBHR. Petitioners reported net losses from
the farming and rental activities undertaken on these properties
in those years.
4 At some point in time, petitioners apparently transferred
this tract to Dr. Burrus’s sec. 401(k) plan.
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