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took the deed in her name and signed the escrow instructions, the
note for the balance of the purchase price, and a deed of trust
securing the note.
In Boesel v. Commissioner, supra, the taxpayers sought to add
to the purchase price of their new principal residence the
discounted present value of future ground lease payments for
purposes of computing their cost of purchasing a new residence for
the nonrecognition provisions of section 1034. In that case, the
taxpayer-husband was transferred by his employer from New York to
California. As a result of the transfer, the taxpayers purchased
a home on land subject to a long-term lease. In computing the cost
of the new residence, the taxpayers included the capitalized value
of their future payments under the land lease. We therein stated
that section 1034 permits nonrecognition of gain "only to the
extent that a taxpayer continues to hold title in fee simple to
property which is occupied as his principal residence". We held
that the taxpayers were not entitled to include as part of the
purchase price of their new residence the cost of the particular
leasehold interest involved in that case. Id. at 386. We further
stated:
Embodied within the statutory language and
authorities * * * requiring continuity of record title as
a precondition to nonrecognition of gain under section
1034 is a desire to prevent taxpayers from enjoying the
benefits of tax deferral (current nonrecognition) while
placing themselves in a position (as nontitleholders) to
escape future recognition altogether. Section 1034 was
created to assist those taxpayers compelled to sell their
old residences, due to family expansion or shifts in
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