Anthony J. Taylor - Page 6




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          secured by a mortgage held by petitioner.  In 1996, petitioner              
          received principal payments totaling $937 in connection with the            
          above-referenced note.                                                      
               After he sold the New Jersey residence, petitioner moved               
          all of his furniture and other items of personal property from              
          the New Jersey residence to the apartment.  His son moved out               
          of the apartment, and petitioner began to manage his Florida                
          property.  From that point on he no longer regularly spent                  
          extended periods in New Jersey.  In 1996, petitioner sold his               
          truck and effectively retired as a commercial driver.  In 1997,             
          petitioner moved from the apartment to another residence he                 
          purchased in Florida.                                                       
               Petitioner did not include any gain on the sale of the New             
          Jersey house in the income he reported on his 1996 Federal income           
          tax return.  In the notice of deficiency, respondent determined             
          that petitioner realized a gain on the sale (computed by using              
          the original purchase price as petitioner’s basis), allowed                 
          installment sale treatment, and adjusted petitioner’s income                
          accordingly.  Other adjustments made in the notice of deficiency            
          are not in dispute.                                                         
          Discussion                                                                  
               Generally, the gain realized on the sale of a personal                 
          residence is includable in the taxpayer’s income.  See secs.                
          61(a)(3), 1001(c).  At the election of the taxpayer, however, and           






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