Basic Real Estate Tax Law Footnote 6

6. Under this rule, gain on the sale of a principal residence was deferred if the seller timely purchased a replacement residence costing at least as much as the adjusted selling price of the old residence. The price for the deferral of homesale gain was the reduction of the basis of the new residence. The reduction was the amount of the gain not recognized on the sale of the old residence. (I.R.C. § 1034(e), prior to repeal by Sec. 312(b) on August 5, 1997)