- 17 - Section 121 provides a one-time exclusion of $125,000 of gain from the sale of a principal residence for an individual who has attained age 55, 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 his principal residence for periods aggregating 3 years or more." Sec. 121(a)(2) (emphasis added), (b)(1). The parties are in agreement that petitioner met the age requirement and used at least a portion of the Solomons house as his principal residence for the requisite period. However, the Solomons house was owned by Solomons, not by petitioner. Thus, section 121 is not applicable to petitioner here. Section 1034(a) provides for rollover of gain on the sale of a principal residence: If property (in this section called "old residence") used by the taxpayer as his principal residence is sold by him and, within a period beginning 2 years before the date of such sale and ending 2 years 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 (as defined in subsection (b)) of the old residence exceeds the taxpayer's cost of purchasing the new residence. Again, the parties are in agreement that petitioner used at least a portion of the Solomons house as his principal residence and that petitioner purchased a "new residence" within the requisite period. Respondent argues that petitioner has not substantiated the amount of the gain allocable to the portion used as a residence and that petitioner did not own the Solomons house and,Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011