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See sec. 1034, repealed by sec. 312(b), Taxpayer Relief Act of
1997, Pub. L. 105-34, 111 Stat 839, effective May 6, 1997.
Petitioners moved to the Palmyra house once it was completed in
April 1997.
The Cumberland house was put back on the market for sale in
April 1997, and was sold in August 1997. Respondent concedes
that the gain from the sale of the Cumberland house was properly
excluded from petitioners’ gross income for 1997 pursuant to
section 121. See sec. 121, enacted by sec. 312(a), Taxpayer
Relief Act of 1997, Pub. L. 105-34, 111 Stat. 836 (amended by
sec. 6005(e), Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, 112 Stat. 805).
Additionally, petitioners purchased an unimproved lot in
Cumberland County in 1980 which they sold in 1997. They reported
a capital gain of $1,597 on their 1997 Federal income tax return.
In 1995, petitioners purchased an unimproved lot in Fluvanna
County for $30,000. They sold the property during that year for
$30,000 and reported the transaction on Schedule C, Profit or
Loss From Business.
On Schedule C of petitioners’ 1996 Federal income tax
return, petitioners deducted the following expenses relating to
the Cumberland house prior to that property’s becoming their
primary residence:
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Last modified: May 25, 2011