Opinion ID: 741483
Heading Depth: 2
Heading Rank: 1

Heading: The Marty Way Property

Text: 8 The Commissioner's deficiency determination is presumptively correct and it is incumbent upon the taxpayer to rebut the presumption by a preponderance of evidence showing that the determination is erroneous. Delaney v. Commissioner, 743 F.2d 670, 671 (9th Cir.1984). The Petitioner's sole contention regarding unreported gains is that the tax court erred in finding that the Petitioner was the sole owner of the Marty Way property. The tax court's determination of the ownership of the Marty Way property is a finding of fact which will not be overturned unless clearly erroneous. Korn v. Commissioner, 524 F.2d 888, 890 (9th Cir.1975); Ellison v. Frank, 245 F.2d 837, 840 & n. 3 (9th Cir.1957). 9 The Petitioner contends that Mary Charles had an unrecorded interest in the Marty Way property. The Petitioner attempted to demonstrate this fact in two ways. First, the Petitioner presented evidence that Mary Charles purchased a $20,165 cashier's check payable to the Petitioner shortly before the Petitioner bought the Marty Way Property. The inference, according to the Petitioner, is that the cashier's check represented Mary Charles's contribution toward the purchase of the property. Second, evidence was introduced indicating that when the Petitioner sold the Marty Way property, sale proceeds were paid directly out of escrow to Mary Charles. Specifically, the seller's instructions provided that Mary Charles was to receive $35,187 in cash and a $15,500 second deed of trust to the property. Mary Charles signed the seller's instructions to acknowledge that the $15,500 note represented an unrecorded interest in the property. 10 The tax court found that Mary Charles was not an owner of the Marty Way property. This determination was based on the tax court's conclusion that the $20,165 cashier's check represented either a loan or gift to the Petitioner, and that the record was devoid of any indication that Mary Charles received or expected to receive any ownership interest in the property. After a thorough review of the record, we agree with the tax court's conclusion that Mary Charles did not have an ownership interest in the Marty Way property. 11 From the Petitioner's perspective, the most damning evidence came from the testimony of Mary Charles herself. Mary Charles could not recall why the $20,165 cashier's check was drawn to the Petitioner, although she did recall that she often made loans to the Petitioner and believed that the cashier's check represented one such occasion. Mary Charles could not recall how much money she contributed to the purchase of the Marty Way property, nor did she recollect that any portion of the Marty Way property was to be allocated to her. The Petitioner's testimony was of little help in resolving these issues. As to the purchase of the property, the Petitioner testified generally that I bought that with my mother, and as to her contribution, it was [a]bout $22,300, as I recall. When pressed for the details of contribution and proportionate ownership interests on cross-examination, the Petitioner could only say that Mary Charles's interest was approximately, I think it was approximately two-thirds but, no, I don't know the exact amount, and that I can't tell you how we, exactly how much cash I put in. On the basis of this testimony alone, the tax court properly found that the $20,165 cashier's check was a gift or loan, rather than Mary Charles's contribution toward and ownership interest in the Marty Way property. 12 The Petitioner's other evidence is also unavailing. That Mary Charles took an ownership interest in the property after it was sold by the Petitioner is little indication that she had an ownership interest prior to that sale, especially in light of the vague testimony described above. In short, the tax court properly concluded that the Petitioner failed to show that Mary Charles had any ownership interest in the Marty Way Property and that the Petitioner should have reported the entire gain realized upon the sale of the property.