James T. and Goldie L. Ryan - Page 7

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          Sec. 1001(c).  However, if a taxpayer sells his or her principal            
          residence, and within 2 years of the date of the sale buys and              
          uses another principal residence, gain from the sale is                     
          recognized only to the extent that the taxpayer's adjusted sale             
          price for the old residence exceeds the cost of the new                     
          residence.  Sec. 1034(a).  The parties dispute whether                      
          petitioners sold the Blue Lake property within 2 years of                   
          July 19, 1989, the date that petitioners bought their Portland              
          residence.                                                                  
          A.   When Petitioners Sold the Blue Lake Property for Purposes              
               of Section 1034                                                        
               Whether a sale is complete for Federal tax purposes depends            
          on all the facts and circumstances.  Derr v. Commissioner, 77               
          T.C. 708, 724 (1981); Baird v. Commissioner, 68 T.C. 115, 124               
          (1977); Clodfelter v. Commissioner, 48 T.C. 694, 700-701 (1967),            
          affd. 426 F.2d 1391 (9th Cir. 1970).  We consider the following             
          factors in deciding whether a sale occurred:  (a) Whether the               
          seller transferred legal title; (b) whether the benefits and                
          burdens of ownership passed to the buyer; (c) whether the owner             
          had a right under the agreement to require the other party to buy           
          the property; and (d) how the parties treated the transaction.              
          Grodt & McKay Realty, Inc. v. Commissioner, 77 T.C. 1221, 1237-             
          1238 (1981); Derr v. Commissioner, supra at 724; Baird v.                   
          Commissioner, supra at 124; Merrill v. Commissioner, 40 T.C. 66,            






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