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David Dental, DDS, and his unmarried partner, Sally Surgeon, MD, have lived together for the past five years. Both are at the peak of their careers and decide to buy a new "show case" home in La Jolla, California. After looking at several homes in the area, they buy one for $2 million. They put a 20 percent down payment ($400,000) on the house and finance the balance ($1.6 million). Each takes out a separate mortgage for $80,000 for a total $1.6 million. There is no other debt (e.g., a home equity loan) on the residence.

a. Locate any courts cases that might provide insight in how to treat this tax situation. Give the citation(s) of any cases you find.

b. Review any case(s) you found. Does it raise a need for new information to solve this question? Do any case(s) you found help the conclusion you reached in Chapters 3 and 4 on this fact pattern?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91697842

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