Terry Duane Beall and Joyce Engel Beall - Page 12

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          (1963), affd. 326 F.2d 760 (2d Cir. 1964), this Court stated that           
               The elements of residence are the fact of abode and the                
               intention of remaining, and the concept of residence is                
               made up of a combination of acts and intention.                        
               Neither bodily presence alone nor intention alone will                 
               suffice to create a residence.  * * *                                  
                    *    *    *    *    *    *    *                                   
                    The phrase "used by the taxpayer as his principal                 
               residence" means habitual use of the old residence as                  
               the principal residence.  [Emphasis added.]                            
          The term "principal residence" means one's chief or main place of           
          residence.  Id. at 351.  In general, the property sold must be              
          the principal residence at the time it is sold.  Thomas v.                  
          Commissioner, 92 T.C. 206, 243 (1989); Aagaard v. Commissioner,             
          56 T.C. 191, 202-203 (1971).                                                
               Moreover, where part of the old residence sold was used as             
          the taxpayer's principal residence and part was used for business           
          purposes,2 only the portion of the gain allocable to the                    
          residential use is entitled to section 1034(a) nonrecognition.              
          Richards v. Commissioner, T.C. Memo. 1993-422; Beckwith v.                  
          Commissioner, T.C. Memo. 1964-254; Grace v. Commissioner, T.C.              
          Memo. 1961-252.                                                             

               2  Respondent argues that 20 The Point was a business asset            
          and that petitioners never abandoned their business use at 20 The           
          Point.  Therefore, respondent contends that 20 The Point                    
          continued to be used as a business asset, and not as petitioners'           
          principal residence.  Because, as discussed later, we determine             
          that 20 The Point was not petitioners' principal residence, we do           
          not need to make an allocation of business and personal use at 20           
          The Point.                                                                  

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