John Weller Wood, Jr., and Magdalena Frances Wood - Page 18

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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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