Often to their peril, selling taxpayers ignore or fail to appreciate the full picture of their sale transaction, as effectively demonstrated by Braen v. Commissioner, TCM 2023-85, and Parker v. Commissioner, TCM 2023-104. More specifically, the taxpayers in each case incorrectly accounted for the consideration received as sellers of property.

It is noteworthy that these recent Tax Court cases, although unrelated and quite disparate (and potentially appealable to different circuits) reinforce the notion that sellers of property must account for all consideration received in the sales transaction, including items that on first blush may appear divisible from or otherwise unconnected to the deal. Braen is appealable to the U.S. Court of Appeals for the Third Circuit, and Parker is appealable to the U.S. Court of Appeals for the Ninth Circuit.

In Braen, the taxpayer did not treat as consideration received in the sale the value of a favorable zoning change to other property owned by the taxpayer, even though the zoning change was a condition of the deal. In Parker, although debt cancellation was a condition of the deal, instead of treating the cancelled amount as part of the sale consideration, the taxpayer treated it separately as cancellation of indebtedness income subject to the insolvency exclusion under IRC section 108.