Donna M. Bokman - Page 9

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          met in this case.  First, it must have been deposited in the mail           
          before the last collection of mail on the return’s due date.                
          Sec. 301.7502-1(c)(1)(iii)(b), Proced. & Admin. Regs.  There is             
          no evidence of when the last collection was made in this case, or           
          what time of day petitioner deposited the return.  Second, the              
          delay in receiving the return must be shown to have been due to a           
          delay in the transmission of the mail.  Id.  There is no evidence           
          showing such a delay in this case.                                          
               Because section 7502 is not applicable, petitioner’s return            
          was untimely filed when the IRS received it on October 21, 1996.            
          Thus, her election out of the installment method was not a valid            
          election under section 453(d), contrary to respondent’s                     
          determination.  See Bolton v. Commissioner, 92 T.C. 303 (1989).             
               Finally, petitioner included in gross income a capital gain            
          of $20,738 from the sale of the residence (the portion of the               
          gain which exceeded the claimed exclusion).  Because petitioner             
          did not make a valid election under section 453(d), she is                  
          required under section 453(a) to report the gain on the sale of             
          the residence using the installment method.  Thus, the inclusion            
          of any portion of the gain from the sale in taxable year 1995 is            
          in error.  See sec. 453(c).  Respondent has conceded that “If               
          petitioner had not included the gain from the sale of her                   
          residence on the return, she would have had no tax liability for            
          1995.”  The record supports this concession.  We accordingly find           

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