90 T.C. 200 (1988), 33699-86, Godlewski v. C.I.R.
|Docket Nº:||Dkt. 33699-86|
|Citation:||90 T.C. 200|
|Opinion Judge:||STERRETT, CHIEF JUDGE:|
|Party Name:||MICHAEL J. GODLEWSKI, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent|
|Attorney:||Michael J. Godlewski, pro se. Carolyn Lee Harber, for the respondent.|
|Judge Panel:||PATE, SPECIAL TRIAL JUDGE:|
|Case Date:||February 09, 1988|
|Court:||United States Tax Court|
Pursuant to a property settlement agreement, petitioner paid $18,000 to his ex-spouse and she transferred their former residence to him. Soon afterward, petitioner sold the house to a third party.
Held, section 1041, as added by the Deficit Reduction Act of 1984, applies to these facts. Held further, petitioner cannot increase the basis of the house by the $18,000 he paid his former spouse for purposes of computing gain realized on the subsequent sale.
This case was assigned to and heard by Special Trial Judge Joan Seitz pate pursuant to the provisions of section 7456 of the Code and Rules 180 and 181.  The Court agrees with and adopts the Special Trial Judge's opinion which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
Respondent determined a deficiency of $5,989 in petitioner's 1984 Federal income tax. After concessions by both parties,  we need only determine the amount of gain realized by petitioner on the sale of a house transferred to him incident to his divorce.
FINDINGS OF FACT
Michael J. Godlewski (hereinafter ‘ petitioner‘ ) resided in Lilburn, Georgia, at the time the petition in this case was filed. Some of the facts have been stipulated and are incorporated as a part of this opinion.
Petitioner was married to his former wife, Elizabeth Godlewski, on December 27, 1967. On July 13, 1973, they purchased a residence located at 1533 Sanden Ferry Drive in Decatur, Georgia, (hereinafter ‘ the house‘ ) for $32,200. The purchase was funded by a cash down payment borrowed from petitioner's uncle and a first mortgage of $28,900. Mrs. Godlewski was named sole titleholder.  On June 24, 1984, the fair market value of the house was appraised at $86,500 by Mrs. Godlewski's professional appraiser.
Petitioner and Mrs. Godlewski lived in the house until May 16, 1981, when petitioner moved out because of
marital difficulties. By court order dated June 10, 1981, Mrs. Godlewski was granted exclusive use of the house and petitioner never lived there again. Mr. and Mrs. Godjewski obtained a final divorce on October 31, 1983, but the divorce decree expressly reserved the division of marital property for later determination.
Consequently, Mr. and Mrs. Godlewski executed an agreement dated July 13, 1984, (hereinafter ‘ Agreement‘ ) purporting to settle ‘ all their property rights, and all other rights and duties growing out of or rising out of the marriage relationship between the parties.‘ Mrs. Godlewski signed the Agreement on July 13th and petitioner signed it on July 25th, 1984. Under its terms, Mrs. Godlewski was required to transfer title to the house to petitioner contemporaneously with the execution of the Agreement and petitioner was obligated to pay Mrs. Godlewski $18,000 within six months of the conveyance. If the payment was not made, the house was to be sold and one-half of the ‘ net equity‘ distributed to each spouse. On August 2, 1984, the Court entered a consent judgment adopting the Agreement in its entirety.
Mrs. Godlewski executed a warranty deed transferring the house to petitioner on July 20, 1984, and the deed was recorded on September 5, 1984. There is no evidence in the record as to the actual delivery date of the deed to petitioner. Petitioner paid a total of $18,000 to Mrs. Godlewski in August and October 1984, consistent with the terms of the Agreement. Petitioner sold the house for $64,000 on October 26, 1984, and on December 3, 1984, he purchased a home in Lilburn, Georgia, for $75,000...
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