Martin Feldman and Lynne Z. Gold-Bikin - Page 6

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          used by a taxpayer as his principal residence depends on all the            
          facts and circumstances of each case.  Roth v. Commissioner, T.C.           
          Memo. 1977-17; sec. 1.1034-1(c)(3)(i), Income Tax Regs.  The                
          taxpayer's cost of purchasing the new residence means the total             
          of all amounts which are attributable to the acquisition,                   
          construction, reconstruction, and improvements constituting                 
          capital expenditures made during the replacement period.  Shaw v.           
          Commissioner, 69 T.C. 1034 (1978); sec. 1.1034-1(b)(7), (9),                
          Income Tax Regs.  Section 1.1034-1(c)(4)(i), Income Tax Regs.,              
          further provides:                                                           
               The taxpayer's cost of purchasing the new residence                    
               includes not only cash but also any indebtedness to                    
               which the property purchased is subject at the time of                 
               purchase whether or not assumed by the taxpayer                        
               (including purchase-money mortgages, etc.) and the face                
               amount of any liabilities of the taxpayer which are                    
               part of the consideration for the purchase.                            
               Commissions and other purchasing expenses paid or                      
               incurred by the taxpayer on the purchase of the new                    
               residence are to be included in determining such cost.                 
               The parties do not dispute the existence of the sale of                
          petitioner husband’s old residence, the date of the sale, the               
          selling price, the gain realized on the sale, or the adjusted               
          sale price of the old residence.  The parties also agree that               
          $229,472 was expended for construction and reconstruction on the            
          King of Prussia residence, and that the King of Prussia property            
          was subject to a $140,806 mortgage.  The parties disagree,                  
          however, on the allocation of these amounts between petitioner              
          husband and petitioner wife.                                                





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