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basis was equal to the $530,000 cost basis. Although petitioner
testified that he made several improvements to the property
during his years of ownership that would adjust the basis upward,
he presented no supporting receipts or documentation. Thus, the
gain that was realized by the bankruptcy estate was equal to
$3,170,000. See sec. 1001(a).
Petitioners argue that the estate should be allowed to use
the $125,000 one-time exclusion of gain under section 121.
However, we need not address the issue of whether the one-time
exclusion is available for use by a bankruptcy estate because an
election was not made by the estate under section 121(c). An
election to use the one-time exclusion must be made prior to the
expiration of the period for making a claim for refund of Federal
income tax for the taxable year in which the sale or exchange
occurred. See sec. 1.121-4(a), Income Tax Regs. Any attempt by
petitioners to make the election currently for the bankruptcy
estate would be untimely.
The $3,170,000 of income from the sale of the personal
residence in 1985 completely absorbs the $2,340,878 loss
belonging to the bankruptcy estate. Thus, petitioners would have
no carryover losses surviving the estate upon its termination to
reduce petitioners’ income during the years in issue. Having
concluded that none of the losses belonging to the bankruptcy
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