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(B) the taxpayer’s intention
not to purchase a new residence
within the period specified in
subsection (a), or
(C) a failure to make such
purchase within such period; and
(2) such deficiency may be assessed
before the expiration of such 3-year period
notwithstanding the provisions of any other
law or rule of law which would otherwise
prevent such assessment.
Thus, the statutory period for the assessment of any deficiency
attributable to any part of the gain realized on the sale or
exchange of a taxpayer’s principal residence will not expire
until 3 years after the Commissioner is notified of: (1) The
taxpayer’s purchase of a new residence; (2) the taxpayer’s
intention not to purchase a new residence within the period
specified in section 1034(a); or (3) the taxpayer’s failure to
purchase a new residence within the period specified in section
1034(a).
Section 1034(l) provides a cross-reference to the one-time
exclusion of gain under section 121.
C. Section 121
Section 121, One-Time Exclusion Of Gain From Sale Of
Principal Residence By Individual Who Has Attained Age 55,
provides in pertinent part:
SEC. 121(a). General Rule.–-At the election of the
taxpayer, gross income does not include gain from the
sale or exchange of property if--
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Last modified: May 25, 2011