Estate of Shannonhouse v. Commissioner

OPINION.

Ahundell, Judge:

Petitioners sold income-producing real property in 1947 by warranty deed and realized on the sale a capital gain which was duly returned. In 1948 it was discovered that one of the buildings sold encroached on the property of a third person. The purchasers were forced to expend $3,331.50 to relocate the building. Petitioners thereafter in 1949 reimbursed the purchasers in the full amount of their outlay and were thereupon released from any further liability for breach of the covenants of title in the warranty deed.

Petitioners contend that the aggregate of $4,281.50 was…