Louis Owns a Condominium in New Orleans That Has Been

Essay

Louis owns a condominium in New Orleans that has been his principal residence for 12 years. He wants to be near Lake Ponchartrain because he enjoys water activities. Therefore, he sells the condominium. His original intent was to purchase a house in New Orleans near the lake. However, the cost of such properties far exceeded his sales proceeds. He was able to purchase a house on the lake in Covington, which is located across the causeway. He invested all of his sales proceeds in the Covington house. After two months of commuting over an hour to and from
work each day, he decides to rent an efficiency apartment in New Orleans near his office. He spends the weekends and vacations at his home in Covington.
a. Does Louis qualify for exclusion of gain under § 121?

b. Does his Covington house qualify as his principal residence?