Law School Case Brief
Guinan v. United States - No. CV 02-0261-PHX-PGR, 2003 U.S. Dist. LEXIS 11923, 91 A.F.T.R.2d (RIA) 2003-2174 (D. Ariz. Apr. 9, 2003)
While time spent in a residence is a major factor, if not the most important factor, in determining whether it is the principal residence, other factors are also relevant under Treas. Reg. § 1.121-1(b)(2).
Plaintiff taxpayers filed an amended tax return in which they excluded the gain realized from the sale of their residence in Wisconsin. The Internal Revenue Service (IRS) disallowed the requested refund, and plaintiffs initiated suit for recovery of the refund. Plaintiffs moved for summary judgment. Defendant United States filed a cross-motion for summary judgment.
Does a longer period spent in one of the taxpayer’s residences make it his principal residence for taxation purposes?
The federal district court noted that the taxpayers spent more time in the Wisconsin house only during the first year of the five-year period. The court held that while time spent in a residence was a major factor, if not the most important factor, in determining whether it was the principal residence, other factors were also relevant. A majority of the relevant factors did not favor any residence as being the principal residence since neither taxpayer filed a Wisconsin state tax return, nor was registered to vote in Wisconsin, nor had a Wisconsin driver's license.
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