Peter T. Storaasli - Page 14

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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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