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transaction incident to her divorce from Mr. Walker. Respondent
contends that petitioner agreed to accept a 25-percent interest
in the Happy Valley property from Mr. Walker within 1 year of
their divorce and in partial satisfaction of the equalizing money
judgment. Furthermore, respondent asserts that petitioner’s
substance over form argument has no merit and that Mr. Walker’s
alleged agreement to report part of the gain resulting from the
sale of the Happy Valley property is not determinative.
In order to decide whether petitioner reported the correct
amount of gain on the sale of the Happy Valley property on her
1997 and 1998 returns, we begin by considering whether petitioner
can disavow the form of the transactions involving the Happy
Valley property.
A. Petitioner’s Assumption That She Can Disavow the Form of
the Transactions Involving the Happy Valley Property in
Favor of Their Alleged Substance
As a general rule, a taxpayer is bound by the form of the
transaction that the taxpayer has chosen. Framatome Connectors
USA, Inc. v. Commissioner, 118 T.C. 32, 47 (2002); Steel v.
Commissioner, T.C. Memo. 2002-113; see Estate of Durkin v.
Commissioner, 99 T.C. 561, 571-572 (1992). Taxpayers are
ordinarily free to organize their affairs as they see fit;
however, once having done so, they must accept the tax
consequences of their choice, whether contemplated or not, and
may not enjoy the benefit of some other route that they might
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