Curtis B. Perry Laura L. Perry v. Commissioner of Internal Revenue

We are asked to consider the application of I.R.C. section 1034 to property relinquished in a divorce settlement. The tax court determined that a taxpayer could not defer recog nition of gain from the sale of his former marital residence. The taxpayer had vacated the property permanently, intending never to return, pursuant to a divorce settlement which gave his former wife an exclusive right of occupancy. We have jurisdiction under 26 U.S.C. § 7482 , and affirm.

I

Petitioner Curtis B. Perry lived with his former wife for five years in their Irvine, California house. The marriage faltered and Curtis Perry moved out of the house on June 15, 1984. He continued to pay the mortgage and other household expenses, but would never again reside at the Irvine address. In August or September 1984, he moved into the house of the current Mrs. Perry in La Mirada, California. He lived there without interruption until 1989.

Curtis Perry and his former wife divorced in December 1985. Their divorce settlement gave the former Mrs. Perry and a minor daughter exclusive use of the Irvine house until December 1987, and provided that they would share equally the burden of taxes and insurance. The…