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Under a contract for deed in Georgia, the buyer obtains a
right to possession; an obligation to pay taxes, assessments, and
charges against the property; a responsibility for insuring the
property; a duty to maintain the property; a right to improve the
property without the seller’s consent; a bearing of the risk of
loss; and a right to obtain legal title at any time by paying the
balance of the full purchase price. All of these elements, short
of transfer of title, were held in Keith to be sufficient for
obtaining equitable ownership. The facts in the case before us
do not establish that AAL obtained equitable ownership before
title to the Fitch Property passed in 1994 by virtue of the
recordation of the Grant Deed upon satisfaction of the escrow
instructions.
For the foregoing reasons, we hold for respondent on this
issue.
II. Section 6662 Accuracy-Related Penalty
In determining that petitioners are liable for the section
6662 accuracy-related penalty, respondent determined that all of
the underpayment of tax for 1994 and 1995 is due to negligence or
disregard of rules or regulations, and that petitioners have not
established that such underpayment was due to reasonable cause.
Since the IRS examination in this case commenced before July 22,
1998, section 7491, relating to burdens of proof and production,
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