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C. David’s Property Transfers
Respondent contends that the rental income, relating to 205
San Sebastian Court and the 797 property transferred by David, is
properly attributable to David. David is indeed liable for the
taxes relating to the rental income from 205 San Sebastian Court.
In 1980, David transferred 205 San Sebastian Court to Walter
Pemberton. Prior to the bank’s foreclosing on the property,
however, David continued to make the mortgage payments and
retained all of the rental income. Even though David transferred
legal title of 205 San Sebastian Court, David remained the
beneficial owner of the property. Lucas v. Earl, 281 U.S. 111
(1930); Serianni v. Commissioner, 80 T.C. 1090, 1104 (1983),
affd. 765 F.2d 1051 (11th Cir. 1985). Arthur and Naomi gave
David the rental income from the 797 property relating to 1988,
1989, and 1992, and David did not retain beneficial ownership of
the property. Accordingly, we sustain respondent’s
determinations relating to 205 San Sebastian Court and reject
respondent’s determinations relating to the 797 property.
D. North Lane Plaza and Scooper’s Ice Cream
Respondent determined that David failed to report
compensation income from NLP and Scooper’s relating to 1986,
1987, 1988, 1989, 1991 and 1992. Petitioners contend that these
funds were withdrawn to reimburse David for expenditures he made
on behalf of NLP and Scooper’s. We agree with respondent. The
funds withdrawn were compensation relating to management services
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