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the 74 acres held in trust; we refer to the property held in
trust as the “Angel-Royse Property” (OS-39).
Petitioner’s financial statement dated November 15, 1985,
lists as an asset, “Angel-Royce Development”;38 a “74 Acre parcel
located on North side of Boggy Creek Road west of the Turnpike
and valued at $8,000 per acre. There are several mortgages
covering the various parcels totaling $212,000 payable over 15
years I own 50%”. The statement values petitioner’s interest in
the property at $300,000, subject to liabilities of $106,000.
In 1986, petitioner exchanged his ownership interest in Lots
26, 27, and 28 of the Arrowhead Lakes Subdivision for Mr.
McLaughlin’s ownership interest in the Angel-Royse Property. In
exchange for the subdivision lots, Mr. McLaughlin forgave the
$30,500 of outstanding principal that petitioner owed to him from
the February 24, 1983, mortgage deed. Mr. McLaughlin also
assumed the liability for real estate taxes on Lots 26, 27, and
28, which totaled $1,251 at the time of the exchange. Petitioner
assumed Mr. McLaughlin’s share of the liabilities associated with
the Angel-Royse Property. Those liabilities totaled $66,202 and
$71,042, respectively, at the time of the exchange. Petitioner’s
basis in Lots 26, 27, and 28 was $40,300. On November 23, 1986,
Mr. McLaughlin transferred his interest in the 74 acres of the
38Petitioner referred to the Angel-Royse Property as the
“Angel-Royce [sic] Development”, the “Angel and Royce [sic]
Property” and the “pit piece”. Mr. McLaughlin also referred to
the Angel-Royse Property as the “Boggy Creek Road” property.
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