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The utility use at the Fairway residence, even though less in
amount than at the townhouse, tripled in the May - June 1990
period. Likewise, telephone use records for July through
November 1990 reflect that more calls were made from the
townhouse during the predawn and evening hours than at the
Fairway residence. Although a relatively large number of daytime
calls were made from the Fairway residence, many of those calls
concerned the construction and improvements and could have been
made by the construction company.
ULTIMATE FINDINGS OF FACT
Petitioners used the Fairway residence as their principal
residence prior to June 21, 1990. A total of $112,470 for
improvements petitioners claimed to be commenced and/or
completed, were not commenced or completed prior to June 21,
1990, and do not qualify for rollover of gain under section 1034.
Petitioners misrepresented the amount of basis or cost in the new
property and were negligent.
OPINION
The primary issue here is whether petitioners met the
requirements of section 1034. That section permits the rollover
or nonrecognition of gain on the sale of a principal residence if
a new residence "is purchased and used by the taxpayer as his
principal residence", in this case, within 2 years of the sale.
Sec. 1034(a). Petitioners contend that they moved in and
continuously used the Fairway residence as their principal
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