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determined is a violation of their equal protection and due process
rights because section 1034 favors wealthy taxpayers and
discriminates on the basis of age; (2) the gain from the sale of
their Mequon residence is "fictitious", resulting solely from
inflation, and because there was no "real gain", there is no income
subject to taxation; and (3) because the IRS does not recognize
either nominal or real losses on the sale of a residence, gain from
the sale of a residence cannot be taxed.4 Not surprisingly,
4 In their petition, petitioners state as follows:
a. Taxing "gain" on the sale of our
residence has no rational basis and violates
the Equal Protection component of the 5th
Amendment Due Process Clause because:
(1) The tax invidiously
discriminates in favor of wealthy
homeowners and against those less
fortunate. The wealthier
homeowner, who trades up to a more
expensive house, has no taxable
gain. In contrast, the less
affluent homeowner, who can't
afford a more expensive house or
must move into rental quarters,
gets taxed merely because he can't
come up with enough to buy anything
or because he can't afford to buy a
house of equivalent or greater
price.
(2) The tax also invidiously
discriminates on the basis of age.
Those who are 55 or older get an
exclusion that no one else
qualifies for.
b. Taxing the "gain" violates the Due
(continued...)
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Last modified: May 25, 2011