- 17 -
2) 505, 555-557. Congress believed that a rollover under section
1034 may not be feasible because the older taxpayer often wants to
purchase a less expensive home or move to a rented residence at
another location and may also need the proceeds from the sale of
the old residence to meet living expenses in the retirement years.
In Woolf v. Commissioner, T.C. Memo. 1981-286, we held that a
rational basis existed for allowing the section 121 exclusion, and
thus the exclusion did not result in any constitutional violations.
We reasoned that in the case of certain older individuals, Congress
made a reasonable attempt to provide for those individuals who,
because of their age and particular situation in life, may wish to
change residences. We stated: "We, accordingly, find no
constitutional violation resulting from the fact that * * * [the
taxpayers'] tax consequences may have been different from those of
other individuals who sold their personal residences".9 Id. "'No
9 In fact, there were a number of other sections in the
Internal Revenue Code that provided for differing tax treatment
depending upon the taxpayer's age. For instance, a taxpayer who
attained age 25 before the close of the computation year and was
not a full-time student during the 4 taxable years commencing
upon attaining the age of 21 and ending with the computation year
would be eligible for income averaging. Former sec.
1303(c)(2)(A) (Tax Reform Act of 1986, Pub. L. 99-514, sec.
141(a), 100 Stat. 2117, repealed sec. 1303, applicable to tax
years beginning after Dec. 31, 1986); see Baldwin v.
Commissioner, 84 T.C. 859, 869 (1985).
In addition, if a taxpayer fails to roll over distributed
retirement funds within 60 days, and the distribution is made
before the date the taxpayer attains the age of 59-1/2, and none
of the other exceptions in sec. 72(t)(2) applies, the tax on the
distribution is increased by an amount equal to 10 percent of the
(continued...)
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