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Sale price $334,000
Closing costs (20,300)
Amount realized $313,700
Purchase price 87,900
Closing costs 1,214
Improvements 153,435
Cost basis $242,549
Depreciation allowed
1992 3,455
1993 3,455
1994 2,827
Total (9,737)
Deferred gain from
sale of Virginia house
Sale price 70,000
Cost (57,000)
Closing costs (3,000)
Deferred gain (10,000)
Adjusted basis (222,812)
Gain on sale 90,888
Respondent increased petitioner’s cost basis in the New
Jersey house by $153,435 for improvements petitioner made to the
house. Respondent included in the improvements to the New Jersey
house $20,000 petitioner established he incurred in 1984 for
modifications to the kitchen. Petitioner asserts that he spent
$22,500 for modifications to the kitchen of the New Jersey house.
Respondent’s determinations are presumed to be correct and
petitioner bears the burden of proof on all issues in these
cases.9 See Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111,
9Sec. 7491, which is effective for court proceedings arising
in connection with examinations commencing after July 22, 1998,
shifts the burden of proof to the Commissioner in certain
circumstances and places on the Commissioner the burden of
production with respect to penalties and additions to tax. Sec.
7491 is inapplicable in these cases because the examination of
petitioner and Mrs. Wood’s returns commenced in December 1997.
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