- 16 - cost of purchasing the King of Prussia property includes only one-half of the outstanding mortgage balance in addition to one- half the reconstruction costs. See, e.g., Snowa v. Commissioner, T.C. Memo. 1995-336; Kellogg v. Commissioner, supra. For purposes of section 1034, petitioner husband's cost of purchasing the King of Prussia property is one-half of the amounts expended for reconstruction and renovation of this property, plus one-half of the outstanding mortgage balance. These amounts ($114,736 + $70,403) total $185,139. Accordingly, because the adjusted sale price of the old residence exceeds his purchase price in the new residence by more than the gain realized ($340,798 less $185,139 equals $155,659, which is more than $106,509), petitioners must recognize all of the gain realized on the sale of petitioner husband's old residence. Petitioners have conceded that the addition to tax under section 6653(a)(1) for negligence is applicable to any deficiency determined in this case. Based on the foregoing, Decision will be entered for respondent.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Last modified: May 25, 2011