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Curtis W. Berner, for petitioners.
Usha Ravi, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
NIMS, Judge: Respondent determined a Federal income tax
deficiency for petitioners’ 1991 taxable year in the amount of
$54,341. The sole issue for decision is whether, for purposes of
section 1034, petitioners may include expenses incurred in
constructing a structure intended for eventual residential use as
part of the cost of their new principal residence, thereby
enabling them to defer recognition of gain on the sale of their
former residence.
Unless otherwise indicated, all section references are to
sections of the Internal Revenue Code in effect for the year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Mr. and Mrs. Parker (petitioners) sold their residence in Los
Angeles, California, on December 24, 1991, for an adjusted sales
price of $363,353. They realized a gain of $182,239 on the sale,
but they deferred recognition of this gain pursuant to section
1034. Then, on May 19, 1992, they purchased a home in Turlock,
California, for $169,500. Petitioners moved into the 1,400-
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