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that he paid for that interest exceeded the adjusted sales price
of the Sepulveda property.
Respondent maintains that Mr. Kirst did not purchase a new
principal residence within the meaning of section 1034. In
advancing this argument, respondent argues that petitioners are
not entitled to nonrecognition treatment because Mr. Kirst did
not obtain record title to the Newport Beach property during the
replacement period. We agree with respondent.
Section 1034 is strictly construed. See Boesel v.
Commissioner, 65 T.C. 378, 386 (1975); see also Lokan v.
Commissioner, T.C. Memo. 1979-380; Bazzell v. Commissioner, T.C.
Memo. 1967-101. If a taxpayer is to receive nonrecognition
treatment under section 1034, it is essential that he or she
maintain continuity of title. Marcello v. Commissioner, 380 F.2d
499, 502 (5th Cir. 1967), affg. on this issue and remanding on
other issues T.C. Memo. 1964-299; Boesel v. Commissioner, supra;
see also De Ocampo v. Commissioner, T.C. Memo. 1997-161; Allied
Marine Sys., Inc. v. Commissioner, T.C. Memo. 1997-101; Edmondson
v. Commissioner, T.C. Memo. 1996-393; Snowa v. Commissioner, T.C.
Memo. 1995-336; May v. Commissioner, T.C. Memo. 1974-54; sec.
1.1034-1(b)(9), Income Tax Regs. This requirement operates to
prevent taxpayers from enjoying the benefits of tax deferral
while placing themselves in a position as nontitleholders to
escape future recognition. See Boesel v. Commissioner, supra at
388.
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