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transferred and the property received in a like-kind exchange be
held primarily for productive use in a trade or business, or for
investment.”), affd. in part and revd. in part on another issue
without published opinion 300 F.3d 866 (10th Cir. 1999). Indeed,
in Starker v. United States, 602 F.2d 1341, 1350-1351 (9th Cir.
1979), the U.S. Court of Appeals for the Ninth Circuit recognized
the longstanding rule that the exclusive use of property by the
owner as his residence contradicts any claim by him that the
property is held for investment. The court applied the rule
specifically to section 1031 exchanges. The court said:
It has long been the rule that use of property solely
as a personal residence is antithetical to its being
held for investment. Losses on the sale or exchange of
such property cannot be deducted for this reason,
despite the general rule that losses from transactions
involving * * * investment properties are deductible.
A similar rule must obtain in construing the term “held
for investment” in section 1031. * * * [Id.;
citations omitted.]
This and other courts have reached the same conclusion in
the context of deciding whether expenses incurred with respect to
a personal residence are deductible under section 212(2) as
“expenses paid or incurred * * * for the management,
conservation, or maintenance of property held for the production
of income”. Property held for investment is property held for
the production of income within the meaning of section 212. See
Newcombe v. Commissioner, 54 T.C. 1298, 1302 (1970) (an expense
deduction is justified under section 212(2) only if the property
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