Gates v. Commissioner
United States Tax Court
135 T.C. 1 (2010)
Relevant factsFree
The Gateses (plaintiffs) demolished their principal residence and built a replacement house on the same land, but never lived in the new house before selling the property at a substantial gain; they claimed the Section 121(a) principal-residence exclusion based on having lived in the original (now-demolished) house long enough to qualify. The Commissioner (defendant) denied the exclusion because no dwelling the Gateses had ever occupied stood on the property at the time of sale.
IssueFree
Whether, to claim the federal tax exclusion for the sale of a principal residence, the taxpayer's principal residence must be the dwelling actually present on the property at the time of sale.