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principal residence on the date of the sale because he rented the
property prior to its sale and (2) the condominium was not
petitioner's new principal residence because he lived most of the
time in the Oakland area, either at his place of work or at the
home of his mother or friends.
Both parties, however, fail to recognize the consequence of
applying section 1034(c)(4) to the sale of petitioner's former
residence on December 31, 1986. Petitioner purchased and
occupied the Castro Valley house on November 13, 1985, and he
purchased and occupied the condominium on August 27, 1988. If
the condominium was used by petitioner as his principal
residence, then the Castro Valley house and the condominium were
both purchased and used by petitioner as his principal residence
during the 4-year replacement period and were both used by
petitioner during the 2-year period after the sale of the former
residence. Since the condominium would be the last principal
residence to be used by petitioner during the 2-year period after
the date of the sale of the former residence, the condominium
would constitute the new residence with respect to the sale of
the former residence. Sec. 1034(c)(4).
Where a taxpayer purchases and sells a number of principal
residences during the statutory period following a section 1034
nonrecognition sale, that statute ignores all of the transactions
except for the last purchase occurring within the period. See
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