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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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