- 6 - the capital gain. Petitioners, on the other hand, advance constitutional and equitable arguments as to why the capital gain is not includable in income. a. Section 1034 Generally, sections 1001 and 61 require a taxpayer to recognize in the year of the sale gain realized on the sale of property. Section 1034,3 which provides an exception to this general rule, allows a taxpayer, in certain circumstances, to defer recognition of all gain realized on the sale of the taxpayer's principal residence (referred to as the old residence) if (1) other property (referred to as the new residence) is purchased and used by the taxpayer as a new principal residence within the period beginning 2 years before the date of the sale and ending 2 years after the date, and (2) the adjusted sale price of the old 3 Sec. 1034 was repealed by sec. 312(b) of the Taxpayer Relief Act of 1997, Pub. L. 105-34, 111 Stat. 839, generally effective for sales and exchanges of principal residences after May 6, 1997. (The repeal of sec. 1034 was part of the capital gains relief provided to individual taxpayers by the Taxpayer Relief Act of 1997.) The sec. 1034 rollover provision was replaced by an expanded and revised sec. 121, which generally provides for the nonrecognition of up to $500,000 of gain realized from the sale of a principal residence by married taxpayers filing a joint return, and up to $250,000 of gain realized by all other individual taxpayers, if during the 5-year period ending on the date of the sale or exchange, the property has been owned and used by the taxpayer as the taxpayer's principal residence for a period aggregating 2 or more years. This exclusion is not predicated on the reinvestment of gain in a new home. References hereinafter to sec. 1034 are to that provision as in effect during the year in issue, 1993.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011