-17-
the "temporary" rental of an old residence prior to its sale does
not preclude the nonrecognition of gain realized on the sale of the
old home, here the old residence ceased to be Mr. Edmondson's
principal residence well before it was sold in 1988. See Perry v.
Commissioner, F.3d (9th Cir., July 31, 1996), affg. T.C.
Memo. 1994-247; Clapham v. Commissioner, 63 T.C. 505, 511-512 (1975)
(the definition of "temporary" depends on the facts and
circumstances of each case).
Moreover, the Edmondsons never purchased a new principal
residence. Mr. Edmondson entered into an oral agreement intended
to give him some type of an interest in the Floyd Avenue house. The
exact details of such arrangement are not clear from the record.
What is clear, however, is that the Edmondsons never purchased the
Floyd Avenue house; the von Behrenses did. See Marcello v.
Commissioner, 380 F.2d 499, 502 (5th Cir. 1967) ("If a third party
owns the residence, the purchase requirements are not met"), affg.
on this issue and remanding T.C. Memo. 1968-268.
Based on the record before us, we conclude that Mr. Edmondson
did not purchase a new principal residence within the period
beginning 2 years before and ending 2 years after the sale of the
Seattle house. Thus, we sustain respondent's position that the gain
on the Seattle house does not qualify for deferred recognition
pursuant to section 1034.
9(...continued)
house.
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