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Petitioners contend that they are entitled to roll over the
$503,250 gain under section 1034. Petitioners bear the burden of
showing their entitlement to the nonrecognition benefits of
section 1034 by proving that they have satisfied all of the
section's requirements. Rule 142(a); Welch v. Helvering, 290
U.S. 111 (1933); Durando v. United States, 70 F.3d 548, 550 (9th
Cir. 1995); see Boesel v. Commissioner, 65 T.C. 378, 386 (1975);
see also Lokan v. Commissioner, T.C. Memo. 1979-380.
Petitioners sold 20 The Point, which they describe as their
old residence, on March 9, 1989, realizing a gain of $503,250,
purchased 15 Sandpiper, the new residence, on November 21, 1988,
and then moved into 15 Sandpiper on March 1, 1989. This meets
the replacement period of 2 years mandated in section 1034.
Thus, we must decide the narrow question whether 20 The Point was
petitioners' principal residence from August 31, 1988 (date of
acquisition of legal title), until March 9, 1989 (date of sale),
and, if so, whether 15 Sandpiper was then used by petitioners as
their principal residence.
The phrase "principal residence" is not defined by the Code;
however, section 1.1034-1(c)(3)(i), Income Tax Regs., provides
that the determination of whether a property is used by a
taxpayer as his principal residence "depends upon all the facts
and circumstances in each case, including the good faith of the
taxpayer." In Stolk v. Commissioner, 40 T.C. 345, 353, 355,
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