Facts
Taxpayers borrowed $1,851,500 on a non-recourse basis to build an apartment complex.
When their basis in the property was $1,455,740 (after their invested capital of $44,212 and deductions taken in the amount of $439,972), they sold it for no consideration other than the assumption of the non-recourse liability.
The fair market value of the property at the time of sale was $1,400,000, so they claimed a loss of $55,740. The Tax Commissioner insisted instead that they actually realized a gain of $400,000; the difference between the principal amount of the debt and their basis.
Read more about this topic: Commissioner V. Tufts
Famous quotes containing the word facts:
“In writing biography, fact and fiction shouldn’t be mixed. And if they are, the fictional points should be printed in red ink, the facts printed in black ink.”
—Catherine Drinker Bowen (1897–1973)
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—Samuel Johnson (1709–1784)
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—Henry David Thoreau (1817–1862)