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Miles, as trustee, sold Lots 6 through 30, for $540,000.18 The
purchasers paid $89,077 in 1988 and issued a purchase money
mortgage for the remainder. We are unable to locate this payment
on petitioner’s spreadsheets for 1988, and it does not appear
that he reported any amount of this payment as income on his
return for 1988.
OPINION
In computing petitioner’s gains from the sales in 1985,
1986, and 1988, respondent apportioned the cost basis of the
entire property equally among Lots 1 through 30 and Tract A, and
assigned a basis of $1,903 to each lot and tract.19 Respondent
determined that petitioner realized a gain of $20,097 from the
sale in 1985,20 a gain of $21,097 from the sale to Mr. Dugger in
1986,21 and installment gains of $77,298 from the sales in 1988.22
On brief, petitioner does not address the disputed gains
18Petitioner incurred selling expenses of $23,831 for this
sale.
19Cost basis for each lot and tract ($1,903) = cost of the
entire property ($59,005)/the number of lots and the tract (31).
20Gain realized ($20,097) = amount realized ($22,000) -
adjusted basis ($1,903).
21Gain realized ($21,097) = amount realized ($23,000) -
adjusted basis ($1,903).
22Gross Profit ($468,594) = sales price ($540,000) - selling
expenses ($23,831) - total of the adjusted bases in lots 6-30
($47,575); gross profit percentage (0.867767) = gross profit
($468,594)/ contract price ($540,000); installment gain from sale
in 1988 ($77,298) = payments received in 1988 ($89,077) x gross
profit percentage (0.867767).
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