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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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