- 8 - such sale and ending 2 years after such date, property (in this section called “new residence”) is purchased and used by the taxpayer as his principal residence, gain (if any) from such sale shall be recognized only to the extent that the taxpayer’s adjusted sales price (as defined in subsection (b)) of the old residence exceeds the taxpayer’s cost of purchasing the new residence. In sum, gain realized upon the sale of a taxpayer’s principal residence is subject to deferral under section 1034(a) if the taxpayer acquires a new principal residence (at a cost equal to or exceeding the sale price of the old residence) within the 2- year period preceding or following the sale of the old residence. Section 1034(j) provides an extended period for the assessment of a deficiency attributable to any gain realized on the sale or exchange of a taxpayer’s principal residence. In contrast to section 6501(a), which provides that the period of limitations on assessment generally expires 3 years after a tax return is filed, section 1034(j) provides: SEC. 1034(j). Statute of Limitations.–-If the taxpayer during a taxable year sells at a gain property used by him as his principal residence, then-- (1) the statutory period for the assessment of any deficiency attributable to any part of such gain shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may by regulations prescribe) of–- (A) the taxpayer’s cost of purchasing the new residence which the taxpayer claims results in nonrecognition of any part of such gain,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011