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relates back to the date of the purported oral agreement.3 The
authority upon which petitioners rely does not espouse their
argument. See Marriage of Garrity, 181 Cal. App. 3d. 675 (Ct.
App. 1986). Suffice it to say that the Federal tax law cannot be
circumvented in the manner advocated by petitioners.4
Mr. Kirst failed to obtain record title to the Newport Beach
property during the replacement period. This alone prevents
petitioners from deferring the gain realized from the sale of the
Sepulveda property. As explained above, continuity of title is
essential if a taxpayer is to receive nonrecognition treatment
under section 1034. Marcello v. Commissioner, supra; Boesel v.
Commissioner, supra.
3It is interesting to note that petitioners' argument is
inconsistent with the evidence of record. That is, petitioners
maintain that, in exchange for certain consideration, Mrs. Kirst
orally agreed in September 1989 to transmute an interest in the
Newport Beach property to Mr. Kirst. According to petitioners,
that "exchange" occurred on April 27, 1990. However, when
petitioners completed Form 2119, which was attached to their
timely filed return for 1990 and was presumably prepared in 1991,
they indicated that Mr. Kirst had yet to purchase a replacement
principal residence. Petitioners fail to explain why the Form
2119 indicates that Mr. Kirst had yet to purchase a replacement
principal residence, while petitioners now argue that the
exchange or transmutation involved in their agreement occurred in
April 1990.
4We do not consider the effect of a written transmutation
agreement that is executed during the replacement period.
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