Allen C. Chamberlin and Martha L. Chamberlin - Page 20

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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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