Patrick G. & Valerie V. O'Malley - Page 29




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          incomplete.  The documentary evidence on which petitioners rely              
          includes certain checks payable to F&M Bank and certain F&M Bank             
          statements.  We found that evidence to be credible.                          
          December 2, 1999 Transaction                                                 
               It was petitioners’ position at the time they filed their               
          1999 return that the December 2, 1999 transaction did not consti-            
          tute a sale of lot 5 when it occurred.  Consequently, they did               
          not report that transaction as a sale in that return.  Petition-             
          ers maintained at trial, and continue to maintain on brief, the              
          same position that they took in their 1999 return.  However,                 
          petitioners argued at trial, and continue to argue on brief,                 
          that, because of events occurring in years after the December 2,             
          1999 transaction, that transaction became a sale of lot 5 in                 
          1999, but for $200,000 and not for $318,000 as reflected in the              
          December 2, 1999 settlement statement.                                       
               We address first petitioners’ position that the December 2,             
          1999 transaction did not constitute a sale of lot 5 when it                  
          occurred.  According to petitioners, the record establishes that             
          that transaction was some type of venture with respect to lot 5              
          between Mr. O’Malley and Kevin O’Malley (alleged venture).                   
          Petitioners contend that, pursuant to that alleged venture,                  
          (1) at the time of the December 2, 1999 transaction, Kevin O’Mal-            
          ley was to (a) borrow $254,400 from F&M Bank and secure that loan            
          with lot 5, (b) contribute $200,000 of the proceeds of the                   







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