- 4 - The sole issue is the value of petitioners’ basis in the property.4 Gross income means all income from whatever source derived, including gains derived from dealings in property. Sec. 61(a)(3). Gain from the sale of property is defined as the excess of the amount realized on the sale of the property over the adjusted basis of the property sold or exchanged. Sec. 1001; sec. 1.61-6(a), Income Tax Regs. The amount realized is the sum of any money received plus the fair market value of any other property received, reduced by the expenses of selling the property. Sec. 1001(b); Chapin v. Commissioner, 12 T.C. 235, 238 (1949), affd. 180 F.2d 140 (8th Cir. 1950). Section 1011 provides that a taxpayer’s adjusted basis for determining the gain or loss from the sale or other disposition of property shall be its cost, adjusted to the extent provided by section 1016. See also sec. 1012. Under section 1016(a)(1), the basis of property must be adjusted for expenditures, receipts, losses, or other items, properly 4Generally, the burden of proof is on petitioner. Rule 142(a)(1). The burden may shift to the Commissioner under sec. 7491 if the taxpayer establishes compliance with the requirements of sec. 7491(a)(2)(A) and (B) by substantiating items, maintaining required records, and fully cooperating with the Secretary’s reasonable requests. Prior to trial, petitioners did communicate with respondent; however, they did not cooperate with respect to producing books and records to substantiate their expenses. The burden of proof, therefore, does not shift to respondent under sec. 7491.Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011