-22-
advance two theories to support their argument that they owned
the property. First, petitioners argue that the partnership was
never fully implemented and therefore should be disregarded.10
Petitioners argue alternatively that the partnership distributed
the South Point Road lot to petitioners in 1992. As we determine
that petitioners failed to meet their burden of proving that they
owned the property, we need not address whether petitioners have
met the other requirements of section 121. See also sec. 1.121-
1(b)(3)(i), Income Tax Regs.
All relevant documentary evidence shows that when the South
Point Road lot was sold in 2001, the seller was the Family
Partnership. Petitioners essentially ask us to apply the
substance over form doctrine. They argue that we should
disregard the form of the transaction (sale by the partnership)
and look instead to the purported substance of the transaction
(sale by petitioners).
10Petitioners do not argue that the Family Partnership
should be “disregarded” as the term is used in sec. 301.7701-
3(a), Proced. & Admin. Regs., which provides that a noncorporate
entity with a single owner can elect to be disregarded as an
entity separate from its owner. Rather, petitioners argue that
the Family Partnership was an alternative means for petitioners
to hold the property in joint tenancy, and therefore, we should
look past the partnership to its purported substance.
If a residence is owned by a single-owner entity that is
disregarded for Federal tax purposes under sec. 301.7701-3(a),
Proced. & Admin. Regs., the owner is treated as owning the
residence for purposes of the sec. 121 ownership requirement.
Sec. 1.121-1(c)(3)(ii), Income Tax Regs. As the Family
Partnership has multiple owners, it may not be disregarded under
sec. 301.7701-3(a), Proced. & Admin. Regs.
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