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Petitioner husband further relies upon Kellogg v.
Commissioner, T.C. Memo. 1986-549, to support his argument that
he is entitled to include the entire cost of reconstruction in
his cost of purchasing the King of Prussia property. However,
the facts in the Kellogg case are definitely distinguishable from
the facts of this case. In Kellogg, the taxpayer sold his
residence in 1979 and moved into his new wife's separate
residence. Shortly thereafter, the wife quitclaimed her interest
in the residence to the taxpayer and herself, as joint tenants
with rights of survivorship. The wife made this transfer in
consideration of improvements already paid for by the taxpayer,
which were made before the house was jointly owned. The
taxpayer’s cost of the acquisition was held to include all of the
reconstruction costs, in addition to one-half of the indebtedness
to which the property was subject. In Kellogg, we did not
address the issue of renovations and restorations made to jointly
owned property.
In the instant case, the King of Prussia property was
jointly owned when the improvements were made to the property.
There is no evidence in the record that petitioner husband
actually paid for more than half the cost of any of the capital
improvements made to the new residence. All the renovation and
restoration payments for the King of Prussia property were made
from a joint checking account in the names of petitioners, or
from a checking account in the name of petitioner wife.
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