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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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