- 7 -
Respondent determined that petitioner husband's cost of
purchasing his interest in the King of Prussia residence was
$185,139, comprising one-half of the total amount expended for
construction and reconstruction ($229,472) and one-half of the
indebtedness ($140,806) that the King of Prussia property was
subject to at the time of purchase. This determination would
deny petitioners the nonrecognition treatment afforded by section
1034. Respondent's determination is presumed correct, and
petitioners bear the burden of proving otherwise. Welch v.
Helvering, 290 U.S. 111 (1933).
Petitioner husband contends that he is entitled to receive
credit for section 1034 purposes for all of the amounts expended
for construction and reconstruction of the King of Prussia
property and that he is entitled to include the entire
outstanding balance of the mortgage in his cost of purchasing the
King of Prussia property. Under his computation, petitioner
husband now seeks to defer his gain realized on the sale of the
Wyndmoor property in its entirety.
Maintaining continuity of title is a key to receiving
nonrecognition treatment under section 1034. See Starker v.
United States, 602 F.2d 1341, 1351 (9th Cir. 1979). The general
rule requires that on the disposition of a taxpayer's old
residence, the ownership of the new residence must be in that
taxpayer's name in order to obtain nonrecognition of gain under
section 1034. Marcello v. Commissioner, 380 F.2d 499, 502 (5th
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011