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personal residence is nondeductible, a principle which is
indisputable. See sec. 1.165-9(a), Income Tax Regs. Respondent
contends that the sale/exchange of the Thousand Palms Property
for the Palm Springs House and the immediate sale thereafter of
the Palm Springs House was in essence a means to enable
petitioners to complete the sale of their Thousand Palms
Property. Consequently, respondent maintains that petitioners
did not purchase the Palm Springs House with the requisite profit
intent to claim a loss under section 165(c)(2).
Petitioners contend that they did not purchase the Palm
Springs House as a personal residence, rather that they purchased
it as an investment. Therefore, they maintain that the loss on
the sale of the Palm Springs House constitutes a loss incurred in
a transaction entered into for profit under section 165(c)(2) and
entitles them to a capital loss carryover for the years in issue.
We disagree with petitioners for the following reasons.
Section 165(c)(2) provides that an individual is entitled to
claim a loss incurred in a transaction entered into for profit
even if the transaction is not connected with a trade or
business.
Section 183 and the regulations promulgated thereunder
provide guidance as to whether a transaction is entered into for
profit. The regulations set forth a nonexhaustive list of
factors that may be considered in deciding whether a profit
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