Richard R. Hamlett - Page 5

                                        - 5 -                                         
          hereinafter sometimes referred to collectively as the Partnership           
          Interests.  Parker paid the entire $35,000 to petitioner in 1996.           
               Petitioner filed timely 1995 and 1996 tax returns.  He used            
          the cash basis accounting method for his Schedule C (Profit or              
          Loss From Business) real estate activities.  Petitioner did not             
          report the income from the sale of the Corporations on either of            
          those tax returns.4                                                         
               Centurion Investments’ 1995 tax return shows petitioner as             
          its tax matters person and sole shareholder; its 1996 tax return            
          shows Parker as its tax matters person and sole shareholder.5               

               4  It does not appear that petitioner reported on his 1996             
          tax return the $35,000 that he received from the sale of the                
          Partnership Interests to Centurion Investments or Parker.  In the           
          notice of deficiency, respondent determined that petitioner                 
          realized a long-term capital gain of $823,016 on his sale of the            
          Spanish Trace Associates and Williamsburg Manor Associates                  
          partnership interests.  The record does not indicate how                    
          respondent determined the amount of this adjustment, or how                 
          respondent treated the gain or loss realized on the sale of the             
          Meadow Green Associates and Crystal Tower Associates partnership            
          interests.  Nevertheless, respondent conceded this adjustment in            
          full.  It is unclear whether the parties dealt with the $35,000             
          elsewhere, and if so, then how they dealt with it.                          
               Our findings as to the Partnership Interests are prompted by           
          the later combining of the Partnership Interests sale and the               
          Corporations sale in the consent decree and in the promissory               
          note, discussed, infra.                                                     
               5  A tax matters person served a role under the so-called              
          partnership audit procedures made applicable to subch. S                    
          corporations by sec. 4 of the Subchapter S Revision Act of 1982,            
          Pub. L. 97-354, 96 Stat. 1669, 1691, 1697, effective for taxable            
          years beginning after Dec. 31, 1982.  This was repealed by sec.             
          1307(c)(1) of the Small Business Job Protection Act of 1996, Pub.           
          L. 104-188, 110 Stat. 1755, 1781, 1787, effective for taxable               

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  Next

Last modified: May 25, 2011