cipal residence for at least 2 of the 5 years immediately preceding the sale. Section 121(a) specifically provides:

SEC. 121(a). EXCLUSION.-Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer's principal residence for periods aggregating 2 years or more. [Emphasis added.]

The maximum exclusion is $500,000 for a husband and wife who file a joint return for the year of the sale or exchange. Sec. 121(b)(2). A married couple may claim the $500,000 exclusion on the sale or exchange of property they owned and used as their principal residence if either spouse meets the ownership requirement, both spouses meet the use requirement, and neither spouse claimed an exclusion under section 121(a) during the 2-year period before the sale or exchange. Sec. 121(b)(2)(A).

The issue presented arises from the fact that section 121(a) does not define two critical terms-"property" and "principal residence". Section 121(a) simply provides that gross income does not include gain from the sale or exchange of property if "such property" has been owned and used by the taxpayer "as the taxpayer's principal residence" for the required statutory period.

Respondent contends that petitioners did not sell property they had owned and used as their principal residence for the required statutory period because they never occupied the new house as their principal residence before they sold it. Respondent's argument interprets the term "property" to mean, or at least include, a dwelling that was owned and occupied by the taxpayer as his "principal residence" for at least 2 of the 5 years immediately preceding the sale. Respondent urges this Court to conclude that a qualifying sale under section 121(a) is one that includes the sale of a dwelling used by the taxpayer as his principal residence. Because petitioners never resided in the new house before its sale in 2000, respondent maintains that the new house was never petitioners' principal residence.

Predictably, petitioners disagree. Petitioners argue that any analysis of section 121(a) must recognize that the exclusion thereunder applies to the gain on the sale of property that was used as the taxpayer's principal residence. Peti

tioners' argument focuses on two facts-petitioners used the original house as their principal residence for the period required by section 121(a) and they sold the land on which the original house had been situated. Petitioners contend that the term "property" includes not only the dwelling but also the land on which the dwelling is situated. Petitioners seem to argue that the requirements of section 121(a) are satisfied if a taxpayer lived in any dwelling on the property for the required 2-year period even if that dwelling is not the dwelling that is sold. Petitioners contend that because they used the original house and the land on which it was situated as their principal residence for the required term, the Summit Road property qualifies as their principal residence and $500,000 of the gain generated by the sale of the property is excluded under section 121.

Because section 121 does not define the terms "property" and "principal residence", we must apply accepted principles of statutory construction to ascertain Congress' intent. It is a well-established rule of construction that if a statute does not define a term, the term is given its ordinary meaning. See Perrin v. United States, 444 U.S. 37, 42 (1979); Nw. Forest Res. Council v. Glickman, 82 F.3d 825, 833 (9th Cir. 1996); Keene v. Commissioner, 121 T.C. 8, 14 (2003). It is also well established that a court may look to sources such as dictionaries for assistance in determining the ordinary meaning of a term. See Muscarello v. United States, 524 U.S. 125, 127-132 (1998). We look to the legislative history to ascertain Congress' intent if the statute is ambiguous. See Burlington N. R.R. v. Okla. Tax Commn., 481 U.S. 454, 461 (1987). Exclusions from income must be construed narrowly, and taxpayers must bring themselves within the clear scope of the exclusion. See Commissioner v. Schleier, 515 U.S. 323, 328 (1995); Dobra v. Commissioner, 111 T.C. 339, 349 n.16 (1998) (citing Graves v. Commissioner, 89 T.C. 49, 51 (1987), supplementing 88 T.C. 28 (1987)).

The American Heritage Dictionary of the English Language 1405 (4th ed. 2000) defines "property" as "Something owned; a possession", "A piece of real estate", and "The right of ownership; title." Merriam-Webster's Collegiate Dictionary 935 (10th ed. 1997) defines "property" as "a quality or trait belonging and esp. peculiar to an individual or thing" and "something owned or possessed; specif: a piece of real estate".

Black's Law Dictionary 1335-1336 (9th ed. 2009) defines "property" as "The right to possess, use, and enjoy a determinate thing (either a tract of land or a chattel)” and “Any external thing over which the rights of possession, use, and enjoyment are exercised".

The American Heritage Dictionary of the English Language 1395 (4th ed. 2000) defines “principal” in its first definition as "First, highest, or foremost in importance, rank, worth, or degree; chief." Similar definitions appear in other dictionaries. See, e.g., Merriam-Webster's Collegiate Dictionary 926 (10th ed. 1997); Black's Law Dictionary 1312 (9th ed. 2009).

The American Heritage Dictionary of the English Language 1483 (4th ed. 2000) defines "residence" as "The place in which one lives; a dwelling" and "The act or a period of residing in a place." Merriam-Webster's Collegiate Dictionary 996 (10th ed. 1997) defines "residence" as "1 a: the act or fact of dwelling in a place for some time b: the act or fact of living or regularly staying at or in some place for the discharge of a duty or the enjoyment of a benefit” and “3 a: building used as a home: DWELLING [synonym]". See also Black's Law Dictionary 1423 (9th ed. 2009). When the dictionary definitions of "principal" and "residence" are combined, we conclude that "principal residence" may have two possible meanings. It can either mean the chief or primary place where a person lives or the chief or primary dwelling in which a person resides. Likewise, the term "property" as used in section 121(a) can refer more broadly to a parcel of real estate, or it can refer to the dwelling (and related curtilage) 11 used as a taxpayer's principal residence.

Because there is more than one possible meaning for both the term "property" and the term "principal residence", we cannot conclude that the meaning of section 121(a) is clear and unambiguous. Section 121(a) is not explicit as to whether Congress intended section 121 to apply to a sale of property when the property sold does not include the dwelling that the taxpayer used as a principal residence for the period that section 121(a) requires. Because section 121(a) is ambiguous, we may examine the legislative history

11 Black's Law Dictionary 441 (9th ed. 2009) defines "curtilage" as "The land or yard adjoining a house, usu. within an enclosure."

of section 121 and its predecessor provisions to ascertain Congress' intent regarding the proper tax treatment of principal residence sales.

Until 1951 any gain realized on the sale of a principal residence was taxed as capital gain. S. Rept. 781, 82d Cong., 1st Sess. (1951), 1951-2 C.B. 458, 482. In 1951 Congress recognized that many taxpayers faced hardship as a result of tax on gain realized on the sale of their principal residences— especially where a taxpayer was compelled to sell his principal residence and move to a new one because of a change in circumstances such as an increase in family size or relocation for employment-and granted relief by enacting section 112(n)(1) (former section 112(n)(1)). Revenue Act of 1951, ch. 521, sec. 318, 65 Stat. 494; S. Rept. 781, supra, 1951-2 C.B. at 482. Former section 112(n)(1) 12 provided that no gain on the sale of a principal residence was recognized if a taxpayer purchased a new residence for a price at least equal to the selling price of the old residence within the period specified therein. Unlike section 121(a), which excludes gain from the sale of property used as a principal residence, former section 112(n)(1) provided for a deferral of gain from the sale of a principal residence. 13 In the Internal Revenue Code of 1954, ch. 736, 68A Stat. 306, former section 112(n)(1) was recodified as section 1034 (former section 1034). 14

In 1964 Congress enacted section 121 (former section 121) as part of the Revenue Act of 1964, Pub. L. 88-272, sec. 206,

12 As enacted in 1951, former sec. 112(n)(1) provided as follows: SEC. 112(n). GAIN FROM SALE OR EXCHANGE OF RESIDENCE.—

(1) NONRECOGNITION OF GAIN.-If property (hereinafter in this subsection called "old residence") used by the taxpayer as his principal residence is sold by him and, within a period beginning one year prior to the date of such sale and ending one year after such date, property (hereinafter in this subsection called "new residence") is purchased and used by the taxpayer as his principal residence, gain (if any) from such sale shall be recognized only to the extent that the taxpayer's selling price of the old residence exceeds the taxpayer's cost of purchasing the new residence.

13 The taxpayer had to reduce the basis in the new residence by the amount of gain excluded under former sec. 112(n)(1). S. Rept. 781, 82d Cong., 1st Sess. (1951), 1951-2 C.B. 458, 483. 14 In 1954 sec. 1034(a) read as follows:

SEC. 1034. SALE OR EXCHANGE OF RESIDENCE

(a) NONRECOGNITION OF GAIN.-If property (in this section called "old residence") used by the taxpayer as his principal residence is sold by him after December 31, 1953, and, within a period beginning 1 year before the date of such sale and ending 1 year after such date, property (in this section called "new residence”) is purchased and used by the taxpayer as his principal residence, gain (if any) from such sale shall be recognized only to the extent that the taxpayer's adjusted sales price*** of the old residence exceeds the taxpayer's cost of purchasing the new residence.

78 Stat. 38, to provide older taxpayers tax relief on the sale of their principal residences. 15 Former section 121 was subsequently amended, see Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, sec. 6011(a), 102 Stat. 3691; Economic Recovery Tax Act of 1981, Pub. L. 97-34, sec. 123(a), 95 Stat. 197; Revenue Act of 1978, Pub. L. 95-600, sec. 404(a), 92 Stat. 2869; Tax Reform Act of 1976, Pub. L. 94-455, sec. 1404(a), 90 Stat. 1733, and as amended, permitted an individual, on a one-time basis, to elect to exclude from gross income up to $125,000 of gain from the sale or exchange of a principal residence if the taxpayer (1) had attained age 55 before the sale and (2) had owned the property and used it as a principal residence for 3 or more of the 5 years immediately preceding the sale.

In the Taxpayer Relief Act of 1997 (TRA 1997), Pub. L. 105-34, sec. 312(a) and (b), 111 Stat. 836, 839, Congress again amended former section 121 and repealed former section 1034. Section 121 as amended by TRA 1997 (section 121) provides that a taxpayer generally may exclude up to $250,000 of gain realized on the sale or exchange of a principal residence occurring after May 6, 1997, each time the taxpayer sells or exchanges a principal residence and meets the eligibility requirements under section 121. Section 121 applies to petitioners' sale of the Summit Road property.

The legislative history of section 121 supports a conclusion that Congress intended the terms "property” and “principal residence" to mean a house or other dwelling unit in which the taxpayer actually resided. In explaining the 1997 amendment to section 121, the House Committee on the Budget used the terms "home" and "house" and their derivations interchangeably with the term "principal residence":

Calculating capital gain from the sale of a principal residence is among the most complex tasks faced by a typical taxpayer. Many taxpayers buy and sell a number of homes over the course of a lifetime, and are generally

15 In 1964 sec. 121 read as follows:

SEC. 121. GAIN FROM SALE OR EXCHANGE OF RESIDENCE OF INDIVIDUAL WHO HAS ATTAINED AGE 65.

(a) GENERAL RULE.-At the election of the taxpayer, gross income does not include gain from the sale or exchange of property if—

(1) the taxpayer has attained the age of 65 before the date of such sale or exchange, and (2) during the 8-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as his principal residence for periods aggregating 5 years or more.