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that he had been warned against making at trial and which had
been stricken from his petition.
OPINION
I. Income From Petitioner’s Sale of Real Property
A. Gain From the Sale of Real Property in General
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
chargeable to capital account. The cost of improvements and
betterments made to a taxpayer’s property are among the items
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