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to which it relates “is ‘held for investment,’ i.e., for the
production of income”); sec. 1.212-1(b), Income Tax Regs. Thus,
both section 1031 and section 212(2) involve the same factual
inquiry whether the property in question was held for investment.
As a preliminary matter, we accept as a fact that
petitioners hoped that both the Clark Hill and Lake Lanier
properties would appreciate. However, the mere hope or
expectation that property may be sold at a gain cannot establish
an investment intent if the taxpayer uses the property as a
residence. See Jasionowski v. Commissioner, 66 T.C. 312, 323
(1976) (“if the anticipation of eventually selling the house at a
profit were in itself sufficient to establish that the property
was held with a profit-making intent, rare indeed would be the
homeowner who purchased a home several years ago who could not
make the same claim”). Moreover, a taxpayer cannot escape the
residential status of property merely by moving out. In Newcombe
v. Commissioner, supra, the taxpayers listed their former
residence for sale on or about the day they moved out, December
1, 1965. They sold the property at a loss on February 1, 1967.
The issue in Newcombe relevant to this case was whether, during
1966, the property was held for the production of income (i.e.,
for investment) so as to entitle the taxpayers to deductions for
maintenance expenses under section 212(2). In denying those
deductions we stated:
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