-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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