-20- Respondent argues that petitioners’ lack of affiliation with social organizations in the Berlin area indicates that the Hagerstown house was their principal residence. Petitioners were involved in the Rotary Club, the Northwood Swim Club, the YMCA, and the Maryland Symphony Orchestra while living in Hagerstown. The record indicates petitioners discontinued affiliation with the Hagerstown organizations in 1997. Petitioners did not become involved with similar organizations in Berlin. Petitioners explain that they did not join a swim club in Berlin because they lived on the water. Furthermore, they did not join similar organizations because Dr. Farah spent a great deal of time traveling, and Ms. Farah spent much of her time caring for her daughter. For the foregoing reasons, we hold on the preponderance of the evidence that the Berlin house was Ms. Farah’s principal residence from July 31, 1997 through September 24, 2001, and that the Berlin house was Dr. Farah’s principal residence from June 30, 1998 through April 30, 2001. Therefore, petitioners have each met the 2-year use requirement of section 121 and are entitled to exclude up to $500,000 of the gain from the sale of the Berlin house.9 9The parties dispute whether the purchase price of the Berlin house was $315,000 as respondent contends, or $365,000 as petitioner contends. The parties stipulated that in addition to the purchase price of the property, petitioners are entitled to (continued...)Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: March 27, 2008