Robert R. Skorniak and Mary Skorniak - Page 2

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          constructed by petitioners during the years 1990 through 1992 was           
          used by them as their principal residence within the time pre-              
          scribed by section 1034(a).2  We hold that it was not.                      
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
               Petitioners resided in Salem, Oregon, at the time the                  
          petition was filed.  Petitioners filed a joint Federal income tax           
          return for 1990.                                                            
               As of November 1988, petitioners owned a house (California             
          residence) that was located in San Jose, California (San Jose),             
          and that they occupied as their principal residence.  On January            
          31, 1990, petitioners sold their California residence for                   
          $295,000.                                                                   
               On November 5, 1988, petitioners purchased a house (3395               
          residence) located at 3395 13th Place S.E., Salem, Oregon                   
          (Salem), for $79,788.50.  In November 1988, immediately after               
          their purchase of the 3395 residence, petitioners operated that             
          property as rental property by leasing it to an unrelated third             
          party who occupied it until July 1989.  In July 1989, petitioners           
          vacated their California residence, moved from San Jose to Salem,           
          and, upon their arrival in Salem, resided at the 3395 residence.            
               In 1989, petitioners purchased for $16,561.50 a vacant lot             

          2  All section references are to the Internal Revenue Code in               
          effect for the year at issue.  All Rule references are to the Tax           
          Court Rules of Practice and Procedure.                                      




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