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3. Unreported Long-Term Capital Gain
As previously stated, respondent determined that petitioner
received income from a long-term capital gain as a result of a
transfer of property by deed in lieu of foreclosure. Petitioner
does not contest that this transaction triggered gain to her and
Mr. Conner. She does, however, contest her personal liability
for tax due stemming from this transaction on the grounds that
she had no idea that she was required to report this income as
she did not receive any Forms 1099-C listing the transaction, and
because all of the income at issue would have been included on
the 1997 Federal income tax return that Mr. Conner, “filed on
[our] behalf.”
We have already concluded that petitioner failed to file a
Federal income tax return in 1997. Mr. Conner filed his 1997
Federal income tax return separately. As previously discussed,
Mr. Conner failed to include income from the transaction on his
1997 tax return, prompting respondent to issue a notice of
deficiency for his share. Since petitioner and Mr. Conner held
the property to which the long-term capital gain is attributable
as owners in joint tenancy, it follows that, upon the transfer of
property by deed, petitioner would have received one-half of the
amount of the transaction, and accordingly, that she would be
liable for the tax due thereon.
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Last modified: November 10, 2007