- 15 -
purchase price,4 as materially different from the 12 percent
in Williams. We see no grounds for treating petitioners' and
the Sopers' option agreement as anything other than an option
agreement.
B. Whether It Is Significant That the Sopers Occupied the Blue
Lake Property Before Title Passed to Them
Respondent argues in the alternative that petitioners' sale
of the Blue Lake property is ineligible for section 1034 because
they leased it to the Sopers before the Sopers bought it. We
need not decide this issue because we hold that petitioners sold
the Blue Lake property more than 2 years after they bought their
Portland residence.
C. Conclusion
We conclude that, for purposes of section 1034, petitioners
sold the Blue Lake property to the Sopers on August 5, 1991.
They may not defer gain realized from the sale under section 1034
4 If we treat the Sopers' $1,250 security deposit as
nonrefundable, they paid 13.82 percent of the purchase price.
That percentage is not materially different from that in
Williams v. Commissioner, 1 F.3d 502 (7th Cir. 1993), affg. 94
T.C. 464 (1990) and T.C. Memo. 1992-269. Cf. Spyglass Partners
v. Commissioner, T.C. Memo. 1995-452 (purchase agreements were
enforceable obligations and not options; despite relatively small
downpayment, benefits and burdens passed to buyers in December
1983 when they had right to possess property, had obligation to
pay pro rata share of property tax, and bore risk of loss of
property).
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