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constituted bona fide loans. On this record, the Court finds that
petitioner failed to report these amounts as income in the
respective years.
III. Whether Petitioner Failed To Report Gains From the Sale of
the Rental Property in Vancouver, Washington, and the
Vacation Home in Black Butte, Oregon
A. Background
Section 61(a)(3) defines gross income for purposes of
calculating taxable income as all income from whatever source
derived, including gains derived from dealings in property.
Section 1 imposes a tax on individuals for taxable income
received.24
From the time the Vancouver and Black Butte properties were
purchased in 1990 through the year of sale, 1998, the Talmages
resided in Japan. At trial, petitioner testified that the loans
used to purchase the Vancouver and Black Butte properties were in
his and Kumiko Talmage’s names and the properties were titled in
both their names. Kumiko Talmage testified she and petitioner had
equal ownership interests in both properties. On brief,
petitioner stated both he and Kumiko Talmage signed the closing
documents when each property was sold. Third-party payor
information reported that petitioner was paid the proceeds from
the sale of each property. Additionally, the proceeds from the
24 Neither party asserted that the Vancouver or the Black
Butte property was community property.
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