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petitioner filed his Federal income tax returns using a Florida
address and did not file New Jersey State income tax returns
after he stopped doing business in New Jersey.
Whether a taxpayer’s residence qualifies as the taxpayer’s
principal residence for purposes of section 121 is a question of
fact that is resolved with reference to “all the facts and
circumstances in each case, including the good faith of the
taxpayer.” Sec. 1.1034-1(c)(3)(i), Income Tax Regs.; see also
Thomas v. Commissioner, 92 T.C. 206, 244 (1989); Clapham v.
Commissioner, 63 T.C. 505, 508 (1975); sec. 1.121-3(a), Income
Tax Regs.
The factors relied upon by respondent in support of his
position are certainly relevant to the question before us, but
they are not determinative, particularly when weighed against
petitioner’s explanation for each event, his personal situation
during the relevant periods, and petitioner’s use of the New
Jersey residence, as his residence for the entire time that he
owned it.
The New Jersey residence was purchased by petitioner for use
as a personal residence and it was consistently owned and used by
him for that purpose until he sold it. It remained fully
furnished, and the majority of petitioner’s personal property was
located there until it was sold. The New Jersey residence was
never rented to others or held for rent to others. Nor was it
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