J. Ramsay Farah and Elizabeth Farah - Page 17

               1.   The Berlin House                                                  
               First, we turn to whether the Berlin house, without regard             
          to the adjacent South Point Road lot, was petitioners’ principal            
          residence.  Respondent does not dispute that petitioners owned              
          the Berlin house.  Rather, the dispute centers on petitioners’              
          use of the Berlin house as their principal residence.  Ms.                  
          Farah’s use of the Berlin house is similar to section 1.121-                
          1(b)(4), Example (2), Income Tax Regs.  From 1977 to July 1997              
          she lived in Hagerstown.  After it was purchased in 1989, she               
          occasionally visited the Berlin house.  In July 1997, she moved             
          to Berlin, rarely returning to the Hagerstown house until                   
          September 2001, when she moved back to Hagerstown because of the            
          impending sale of the Berlin house.                                         
               Dr. Farah’s residency is not as simple.  After his wife                
          moved to Berlin, Dr. Farah continued to spend significant time in           
          Hagerstown until the sale of his medical practice in June 1998.             
          After the sale of his medical practice, he spent far less time in           
          Berlin than his wife because of his work schedule.                          
               In May 1998, he began working for Sierra, a job that                   
          required him to be in Baltimore 3 days a week.  Baltimore is                
          approximately 75 miles from Hagerstown and 138 miles from Berlin.           
          The job also required that he travel extensively, though the                
          record is unclear whether that travel substituted for his 3 days            
          in Baltimore.                                                               

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