Peter Mamula and Dorothy R. Mamula v. Commissioner of Internal Revenue

This case is before us on a petition to review a decision of the Tax Court of the United States. 41 T.C. 572 (1964). Taxpayer challenges the decision of the Tax Court upholding respondent’s assessment of deficiencies for the taxable years 1959 and 1960. Jurisdiction is conferred on this court by Section 7482 of the Internal Revenue Code of 1954.

The facts are not in dispute. In April 1959, taxpayer sold two parcels of real property which he had acquired on or about May 2, 1958. One parcel, which had a basis of $51,051.63, was sold for $150,000, taxpayer receiving from the purchaser a down payment of $5,000 in cash, plus a promissory note in the amount of $145,000, secured by a deed of trust. The other parcel, which had a basis of $27,601.70, was sold for $39,000; taxpayer received a down payment of $5,000 in cash, plus four promissory notes in the respective amounts of $18,-000, $10,000, $4,000 and $2,000.

Petitioner’s tax return for 1959 was prepared by an experienced certified public accountant who, for five years, had regularly prepared petitioner’s federal income tax returns. The accountant advised petitioner that the profits from the sale of the real properties could be…