331 U.S.1, 67 S. Ct.1047,91 L.Ed.1301,1947 U.S.3021 Essay

331 U.S.1, 67 S. Ct.1047,91 L.Ed.1301,1947 U.S.3021 - Essay Example It was the genesis of the current tax law which states that if a buyer assumes a nonrecourse debt upon the sale of a property, that assumption will be equivalent to receiving cash proceeds from the seller of the property and thus should be included in the calculation of tax. The following section gives a brief of Crane v. Commissioner. (Lau, 2007).   The petitioner’s husband died and because she was the sole beneficiary of the will, she had to inherit all the property he owned. Among the property, there was an apartment he had built on mortgage. Therefore, the petitioner contracted with the mortgaging company to continue operating the property and remit the net rental to the company. The petitioner was the sole beneficiary of the will her husband had written. Her husband owned an apartment building and a lot which were subject to a mortgage. The apartment building was valued at 255,000 US dollars. The petitioner entered into an agreement with the mortgaging company to allow her continue operating the property. The agreement allowed the petitioner to remit the net rentals to the mortgaging company. The apartment building did not have equity and this was because the outstanding balance on the mortgage and the interest in arrearage equaled the total appraisal value of the apartment. This petitioner owned the apartment for seven years and during this time, she claimed depreciation deductions. The petitioner later sold the apartment to a third party for 3000 US dollars which she paid 500 US dollars for expenses incurred during the selling process. The third party also took the apartment subject to a mortgage. Because the petitioner believed that she had no basis on t he property, she took zero depreciation, and thus, the sale of the property generated a gain of 2500 US dollars. The Commissioner of Internal Revenue determined that the petitioner had realized a net taxable gain of 23, 767.03 US dollars. The Commissioner’s theory was that the property was not