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October 2, 1997. The bargain and sale deed that conveyed the
Happy Valley property to Parker Development was signed by
petitioner on October 10, 1997. This bargain and sale deed was
recorded by Parker Development in November 1997. As shown on the
Seller Final Closing Statement (closing statement), the closing
date for Parker Development’s purchase of the Happy Valley
property was November 5, 1997. The closing statement listed only
petitioner and the Walker Family Irrevocable Trust as sellers of
50-percent interests in the Happy Valley property. There was no
reference in the closing statement to Mr. Walker’s participating
in the sale of the Happy Valley property.
Petitioner’s and Mr. Walker’s Tax Returns
Coburn prepared petitioner’s Federal income tax returns for
1997 and 1998 (1997 and 1998 returns) and used the installment
method to report the gain on the sale of a 25-percent interest in
the Happy Valley property on those returns. Petitioner told
Coburn that Mr. Walker agreed to pay the tax on 25 percent of the
gain resulting from the sale of the Happy Valley property to
Parker Development. Petitioner did not provide to Coburn the
Settlement Agreement or quitclaim deed that transferred
Mr. Walker’s interest in the Happy Valley property to her while
Coburn was preparing her 1997 and 1998 returns. Consequently,
Coburn prepared petitioner’s 1997 and 1998 returns without regard
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Last modified: May 25, 2011