dissenting: I cannot agree that solely because petitioner may not have had the unqualified right to recover the entire balance of the cash consideration to be paid for the property that this transaction did not become a sale of the old residence for purposes of section 1034 until the balance of the cash consideration was actually paid. Section 1034 is a relief provision which permits a taxpayer to postpone recognition of gain on the sale of property used by him as his principal residence if he reinvests the proceeds from the sale of the old residence in a new residence within the time specified. It should be applied with the congressional purpose in mind.
It seems clear to me that not later than December 31, 1962, petitioners had given up the use and possession of their old residence, the purchasers had acquired possession of the property with the right to raze or remove the house and had assumed all of the benefits and burdens of ownership, and that the parties intended ownership of the property to pass prior to that date. See Ted F. Merrill, 40 T.C. 66. Petitioners were by that time unconditionally bound to deliver a deed to the purchasers upon payment of the purchase price. Delivery of the deed and payment of all installments of the purchase price did not defer consummation of the transaction. I disagree with the majority’s emphasis on the absence of personal liability on the part of the purchaser. Sales often occur where, in the event of default, the seller’s recourse is limited to the property itself. I think that for purposes of section 1034 the sale of the old residence occurred not later than December 31, 1962, and consequently petitioners are not entitled to the nonrecognition benefits provided in that section.
If the rationale of the majority opinion is to be applied in all instances, a taxpayer, by selling his residence under a contract of sale containing the same recourse provision as the contract here involved, but with the consideration to be paid in installments over an extended period of time, could extend the period within which he could reinvest the proceeds of sale and defer recognition of gain on the sale far beyond the period contemplated in the statute and make the statute meaningless.
Tietjens, Raum, Tannenwald, and Simpson, //., agree with this dissent.