- 6 -
and $5,854 of which was applied as a carryover loss deduction to
offset petitioners’ ordinary income and/or capital gain for 1996
and/or for 1997.
On their 1998 and 1999 joint Federal income tax returns,
petitioners claimed a capital loss carryover of $585,172 relating
to the purported 1995 sale of the property by petitioners to the
Trust, $3,000 of which was applied to offset petitioners’
ordinary income for each of 1998 and 1999 and $137,544 of which
was applied to offset petitioners’ capital gain for 1999.
On audit of petitioners for 1998 and 1999, respondent
determined that the transfer of the property by petitioners to
the Trust constituted a sham transaction and that no actual loss
was realized by petitioners. Alternatively, respondent
determined that even if petitioners transferred the property to
the Trust, the property constituted a personal asset of
petitioners with respect to which no capital loss carryover
deductions for 1998 and 1999 were allowable.2
2 The record herein does not indicate whether respondent
disallowed the capital loss deductions claimed by petitioners for
1995, 1996, and 1997 and whether respondent determined a
deficiency against petitioners for those years relating to the
purported 1995 sale of the property by petitioners to the Trust.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011