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tax in the amount of $1,635 for substantial understatement of tax
pursuant to section 6661.
After a concession by respondent,2 the sole issue for our
decision is whether petitioner is entitled to nonrecognition
treatment under section 1034 for the gain he realized on the sale
of his principal residence.
Some of the facts have been stipulated and are so found.
The stipulation of facts and attached exhibits are incorporated
herein by this reference. At the time the petition was filed,
petitioner resided in Long Beach, New York. Subsequently,
petitioner relocated to Texas in November 1992.
During a part of 1987, petitioner resided in Bridgeport,
Connecticut. In February of that year, petitioner lost his job
when his employer became insolvent and decided to discontinue
operations. Because of financial difficulties, petitioner sold
his principal residence on May 1, 1987, and realized a capital
gain of $36,171. Petitioner did not report this gain on his 1987
Federal income tax return. Rather, petitioner chose to defer
recognition of the gain because he intended to replace his home
within the replacement period provided by section 1034.
Petitioner moved to the New York City area, and in August
1987 found full-time employment as a sales agent. During this
2 At trial, respondent conceded that petitioner was not liable
for an addition to tax for substantial understatement of tax
under sec. 6661 for the 1987 taxable year.
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