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indicated, all section references are to the Internal Revenue
Code in effect for the year in issue, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
Petitioners are cash basis taxpayers who resided in
Knoxville, Iowa, at the time that they filed their petition.
On April 10, 1978, petitioner purchased a remainder interest
in 80 acres of land in Poweshiek County, Iowa, for $20,000. At
the time of purchase and at least through 1997, petitioner’s
sister held a life estate in the 80 acres. Petitioner held the
remainder interest with his three sons as tenants in common, each
owning a one-fourth interest in the property with an adjusted
basis of $5,000. The transaction was entered into for profit.
The 80 acres involved was made up of two 40-acre tracts of
land. The two 40-acre tracts were approximately equal in value.
Located on one of the 40-acre tracts was a well-preserved barn
that was considered a showplace. The value of the barn was
approximately 54 percent of the total value of the 40-acre tract
upon which it stood. The barn was used for agricultural
purposes, and the remainder of the land was used for pasture by a
third party.
In 1997, a windstorm or tornado swept through the area where
the property is located and destroyed the barn. All that
remained was approximately $2,000 worth of salvageable lumber.
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