- 11 -
further observe that there is no direct reference to section 121
in section 6501. However, paragraph (4) of section 6504, titled
“Cross References”, provides: “For limitation period in case
of–- * * * (4) Gain upon sale or exchange of principal residence,
see section 1034(j).”
D. Current Law
As an epilogue to the preceding discussion, section 121 was
amended, and section 1034 was repealed, under the Taxpayer Relief
Act of 1997 (TRA), Pub. L. 105-34, sec. 312(a) and (b), 111 Stat.
836, 839, generally effective with respect to sales and exchanges
after May 6, 1997. TRA section 312(a) and (b) provides that all
taxpayers may elect to exclude from gross income up to $250,000
of gain ($500,000 for joint filers) realized on the sale or
exchange of a principal residence.
E. The Parties’ Positions
Petitioners do not dispute that the period of limitations
under section 1034(j) would apply to a determination that the new
residence that they purchased in 1997 does not qualify as their
principal residence within the meaning of section 1034. However,
petitioners assert that the general 3-year period of limitations
under section 6501(a) bars respondent from determining that the
old residence (the Solvang property) was not their principal
residence under section 121 or section 1034. Petitioners contend
that the general 3-year period of limitations expired in this
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