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consisted of portable electric heaters and a wood-burning stove
located in the basement of the house.
Petitioners resided at and used the 3395 residence before
and after January 31, 1992, during the course of the construction
of the 3405 house. As of January 31, 1992, and for an unspeci-
fied period of time thereafter, petitioners continued to receive
mail, their personal possessions, including furniture, were
located, and they continued to use the laundry facilities, at the
3395 residence. In June 1992, for the first time since they
moved into the 3395 residence in July 1989, petitioners resumed
operating that residence as a rental property by leasing it to an
unrelated third party.
Petitioners included a Form 2119, "Sale of Your Home", as
part of the 1990 Federal income tax return they filed (1990 re-
turn) and did not report in that return any gain from the sale of
their California residence. That form indicated that (1) peti-
tioners sold their California residence on January 31, 1990;
(2) its selling price was $295,000; (3) the selling expenses as-
sociated with that sale were $19,711; (4) petitioners' basis in
that residence was $61,325; and (5) their realized gain from that
sale was $213,964. The Form 2119 included as part of petition-
ers' 1990 return also indicated that, as of October 15, 1991,
petitioners had not replaced their California residence and that
they planned to replace it within the "replacement period".
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