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the sale of the Roslyn residence on November 21, 1986, and they
purchased the Lincoln Plaza residence on November 9, 1988. We
note initially that the Gordons could have used Mr. Gordon's 1986
net trading loss to offset the long-term capital gain that they
realized from the sale of their Roslyn residence, regardless
whether that loss was characterized as a capital, or an ordinary,
loss. Moreover, although the Gordons did not offset the gain
from the sale of the Roslyn residence by Mr. Gordon's 1986 net
trading loss, they did not have any additional tax liability for
1986 resulting from that gain. Indeed, the Gordons indicated in
the Form 2119 included as part of their 1986 return that they
planned to replace the Roslyn residence within the "replacement
period". Consequently, they did not include any portion of that
gain in the income reported in that return. In addition, the
Gordons indicated in the amended Form 2119 included as part of
their amended 1986 return that they had replaced the Roslyn
residence, included in the income that they reported in that
return a capital gain of $29,391 from the sale of that residence,
and claimed a net operating loss deduction of $35,065 that was
attributable to an alleged net operating loss carryover from
1985.
Moreover, we do not believe that Mr. Gordon relied on the
IRS revenue agent's oral statement to him in October 1988 and the
IRS' issuance of the no-change letter in May 1989 in choosing to
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