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After selling his Richmond home, petitioner continued his
search for a new home and completed his obligations under the
debt repayment plan with a lump-sum payment in April 1990, at
which time petitioner's bankruptcy case was closed.
Petitioner's next attempt to obtain a loan for the purchase of a
new home occurred in May 1991, but he was again unsuccessful,
presumably due to his recent bankruptcy.
During the ensuing 2 months, petitioner finally located and
succeeded in obtaining financing for the purchase of a home in
Fairfield, California. Petitioner testified that he made a
deposit on his new home in July 1991, and that he received a key
and moved into the house prior to August 1, 1991. The grant
deed, however, was not signed by the sellers until August 2,
1991, and the settlement date for the transfer was August 7,
1991. Petitioner paid $137,500, excluding settlement charges,
for the house.
OPINION
The first issue for decision is whether the gain realized by
petitioner in 1989 from the sale of his old residence qualifies
for nonrecognition treatment under section 1034(a). Section 1034
allows a taxpayer to defer the recognition of gain realized from
the sale of his principal residence, provided he meets the
requirements of the statute. It provides, in relevant part, that
when property used by a taxpayer as his principal residence is
sold by him and, within the period beginning 2 years before the
date of such sale and ending 2 years after such date, property is
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