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Tomson contracted with Joseph P. Sexton, Inc. (Sexton), to
renovate the existing building and surrounding property. The
gasoline station had service bays to repair automobiles. Sexton
converted the space for the service bays into a convenience
store. Tomson paid Sexton $183,507 for this work, which was
completed by the end of June 1996. The gasoline station was
ready for business at that time.
Tomson operated the gasoline station and convenience store
until it sold the property to Sembler E.D.P. Partnership
(Sembler) in 1998 for $822,000. The closing date for the sale
was April 9, 1998. As of the closing date, the $190,000 note
that was payable to Amoco had been reduced to $170,000. Tomson
did not pay the balance of the note.
Petitioners determined the basis that Tomson had in the
property that it sold to Sembler by taking into account the
following amounts:
Source Amount
Purchase of property from Amoco
- Cash $140,000
- Note 190,000
Tank installation costs 159,462
Construction costs
- Ryko Manufacturing 45,005
- Sexton 145,000
Sale closing/miscellaneous expenses 64,229
Additional expenses 168,304
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Last modified: May 25, 2011