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"The clear statutory language requires that a new residence
be purchased and used by the taxpayer." Marcello v.
Commissioner, supra at 502. If a third party owns the new
residence, the purchase requirement of section 1034(a) is
ordinarily not met. Id. The reasons for having a third party
purchase the new residence or the fact that the taxpayer provided
the third party with the funds to purchase the new residence are
simply not relevant. See De Ocampo v. Commissioner, supra;
Allied Marine Sys., Inc. v. Commissioner, supra; Edmondson v.
Commissioner, supra; May v. Commissioner, supra.
Petitioner chose to form Bay and have Bay purchase the Haifa
property. Courts have repeatedly observed that "while a taxpayer
is free to organize his affairs as he chooses, nevertheless, once
having done so, he must accept the tax consequences of his
choice, whether contemplated or not". Commissioner v. National
Alfalfa Dehydrating & Milling Co., 417 U.S. 134, 149 (1974).
Furthermore, nearly 6 months after Bay purchased the Haifa
property petitioner, on the Form 2119, stated that she had not
bought or built a new main home.
Petitioner failed to obtain record title to the Haifa
property, or any other property that would qualify as a new
residence, during the replacement period. This alone prevents
petitioner from deferring the gain realized on the sale of the
California residence. See id.; Boesel v. Commissioner, supra.
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Last modified: May 25, 2011