- 11 -
house. Within the reinvestment period, they constructed and
moved into the guest house. See id. They also expended funds in
building the main house, but this structure was still under
construction and not yet occupied at the expiration of the
statutory period. See id. As a result, this Court refused to
allow costs of the main house to be taken into account for
purposes of section 1034, stating that the main house “possessed
no residential utility” and “was simply not put into use as a
residence before the prescribed time limit.” Id. at 241.
Although petitioners attempt to distinguish Elam v.
Commissioner, supra, on the grounds that the guest house and main
house in that case were separate residences, rather than two
structures intended as a single residence, this difference
becomes irrelevant in light of the precedent that both new
residences and mere additions or improvements must be placed into
residential use before section 1034 will apply. Moreover, the
Court in Elam even addresses this multiple buildings issue.
While indicating that outbuildings and servient structures might
in some scenarios logically and functionally be classified as
part of a residence, the Court makes clear that an unfinished
structure intended for future dwelling performs no such logical
residential role. See id.
Poague v. United States, 66 AFTR 2d 90-5825, 90-2 USTC par.
50,539 (E.D. Va. 1990), affd. without published opinion 947 F.2d
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011