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The “adjusted sales price” is the amount realized reduced by
expenses for work performed on the old residence to assist in its
sale. Sec. 1034(b); sec. 1.1034-1(b)(3), Income Tax Regs. The
“amount realized” is the consideration received with respect to
the old residence, reduced by selling expenses. Sec. 1.1034-
1(b)(4), Income Tax Regs. The taxpayer’s cost of purchasing the
new residence includes commissions and other purchasing expenses.
Sec. 1.1034-1(c)(4)(i), Income Tax Regs. In addition, the basis
of the new residence must be reduced by the amount of any gain on
the sale of the old residence that is not recognized pursuant to
section 1034. Sec. 1034(e).
C. Petitioner’s Arguments
Petitioner argues that for purposes of calculating the
amount of gain, if any, he must recognize on the sale of each
property, he is entitled to increase his adjusted basis in each
property for expenses related to his ownership and use of the
properties. Other than petitioner’s own testimony, the only
evidence petitioner offered to substantiate the expenses
respondent disallowed were the settlement statements from the
purchase and sale of each property and various receipts for
improvements he made to the Market Street property and the
Hollywood Hill lot. These settlement statements and receipts,
however, do nothing more than affirm respondent’s revised
position as to each property’s adjusted basis and sale price.
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