-15-
for 3 years. Petitioners contend that Schmitz erroneously
checked that box. Petitioners did not call Schmitz to explain
why he checked the box indicating that petitioners had not owned
and used the W. 22d property for 3 years. Petitioners did not
explain why they did not immediately correct the return when they
noticed what Schmitz had done. Although this is not compelling
evidence in isolation, it adds some weight to the other evidence
that petitioners had not owned and used the Spokane property for
3 years when they sold it in 1992. See Bank of the West v.
Commissioner, 93 T.C. 462, 468 (1989); Kenyatta Corp. v.
Commissioner, 86 T.C. 171, 182 (1986), affd. per order 812 F.2d
577 (9th Cir. 1987); McShain v. Commissioner, 71 T.C. 998, 1010
(1979).
4. Conclusion
Income tax provisions which exempt taxpayers under given
circumstances from paying taxes or permit them to postpone taxes
are strictly construed. Commissioner v. Baertschi, supra at 498-
499 (the taxpayer/sellers were not entitled to section 1034
deferral). We conclude that petitioners did not meet the
statutory requirement that they own and use the Spokane property
for 3 years.
A taxpayer seeking to exclude gain on the sale of property
must own and use that property as his or her principal residence
for 3 years or more. Sec. 121(a)(2). Petitioners used the W.
22d property for more than 3 years. However, they did not bear
enough of the benefits and burdens of ownership before title
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011