- 13 - In advancing her argument, petitioner assumes that she can disavow the form of the transactions that occurred with respect to the Happy Valley property. Based on this assumption, petitioner asserts that the following substance should control the tax consequences of the transactions involving the Happy Valley property: The quitclaim deed of September 26, 1997, constituted a written request from Mr. Walker to petitioner that she sell his 25-percent interest in the Happy Valley property to a disinterested third party; therefore, petitioner’s sale of the Happy Valley property to Parker Development took place on behalf of Mr. Walker. Petitioner contends that this substance falls within the scope of the second situation described in section 1.1041-1T(c), Q&A-9, Temporary Income Tax Regs., 49 Fed. Reg. 34453 (Aug. 31, 1984). Accordingly, petitioner concludes that she should be provided nonrecognition-of-gain treatment under section 1041(a) as to the 25-percent interest in the Happy Valley property that she sold on behalf of Mr. Walker. As a backstop to her substance over form argument, petitioner contends that she filed her 1997 and 1998 returns in accordance with an agreement that she had with Mr. Walker that he would report one-half of the gain resulting from the sale of petitioner’s undivided 50-percent interest in the Happy Valley property. Conversely, respondent argues that petitioner failed to report a gain on the sale of property that she acquired in aPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011