- 18 -
that may be added to the adjusted basis of either property and
recovered upon sale.
With respect to petitioner’s argument that the cost of his
personal labor should increase his adjusted basis in the
properties at issue, no provision of the Code authorizes an
increase in basis for the cost of a taxpayer’s personal labor,
and we have consistently held that the cost of a taxpayer’s
personal labor shall not be considered in computing adjusted
basis, regardless of whether the property is held for the
production of income or as a principal residence. Cox v.
Commissioner, T.C. Memo. 1982-667; Bayly v. Commissioner, T.C.
Memo. 1981-549; Erwin v. Commissioner, T.C. Memo. 1978-10; Miller
v. Commissioner, T.C. Memo. 1975-8. Consequently, we reject
petitioner’s argument.
D. Basis Adjustment Under Section 1034
Respondent concluded that petitioner must recognize gain of
$571,418 on the sale of the Rose Point Lane property. In
arriving at that figure, respondent adjusted petitioner’s cost
basis in the Rose Point Lane property to account for acquisition
and refinancing costs and deferred gain from the sale of
petitioner’s previous residence, and adjusted the sales price to
account for the cost of selling the property. Because petitioner
reinvested a portion of the sale proceeds from the Rose Point
Lane property in a new residence, however, petitioner must
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011