Fiscalini v. Commissioner, TC Memo 2017-163

In summary, a taxpayer sold his residence to his parents for a sales price of $975,000.  He received no cash directly.  The parents paid off his mortgages with a total of $664,000.

The Tax Court determined that the mortgage relief was the effective sales price of $664,000. Minus basis and the $250,000 Section 121 exclusion for sale of a residence resulted in gain of $122,000.

The remaining equity of $311,000 ($975k – 664k) was deemed to be a gift from the taxpayer to his parents.