Terry Duane Beall and Joyce Engel Beall - Page 23

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          were consistent with California's homeowners' exemption                     
               In regard to the driver's license and the voter                        
          registrations, petitioners acquired 20 The Point on August 31,              
          1988, and within 3 months they had purchased 15 Sandpiper.                  
          Because of the short time involved, we do not consider it                   
          significant that 20 The Point was not listed on either                      
          petitioners’ driver's licenses or voter registrations.                      
               After considering the record as a whole, and on balance, we            
          find that 20 The Point was not petitioners' principal residence             
          during the relevant period.  In our judgment, their principal               
          residence was Mary Street.  Therefore, we sustain respondent's              
          determination that section 1034 is inapplicable and hold that               
          petitioners must recognize the gain on the sale of 20 The Point             
          in 1989.                                                                    
          Issue 2. Accuracy-Related Penalty                                           
               Respondent determined an accuracy-related penalty pursuant             
          to section 6662(a) for petitioners' 1989 tax year.  Section 6662            
          imposes a penalty equal to 20 percent of the portion of an                  
          underpayment of tax that is attributable to "negligence or                  
          disregard of rules or regulations."  Sec. 6662(a) and (b)(1).               
          The term "negligence" includes "any failure to make a reasonable            
          attempt to comply with the provisions of this title," and the               
          term "disregard" includes "any careless, reckless, or intentional           

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