- 13 - residence for periods aggregating 3 years or more of the 5-year period ending on the date of the sale or exchange and if the taxpayer attained the age of 55 before the date of the transaction. Gain from a sale or exchange of property is subject to deferral under section 1034 if the property was used by the taxpayer as his principal residence and the taxpayer acquires a new principal residence within the 2-year period preceding or following the sale of the old residence. Just as section 1034(a) grants the taxpayer an extended period to complete a section 1034 transaction with the acquisition or construction of a new residence, section 1034(j) in turn grants the Commissioner an extended period of time within which to assess any deficiency attributable to gain from the sale or exchange property that the taxpayer has characterized as his principal residence. Contrary to petitioners’ position, the statutory scheme does not suggest that Congress intended bifurcated examinations of section 1034 transactions. In other words, rather than require the Commissioner to conduct one examination to determine whether the property sold was the taxpayer’s principal residence and a second examination to determine whether the property purchased qualifies as a new principal residence, section 1034(j) permits the Commissioner to examine all aspects of the transaction at once. In this regard, section 1034(j)(1) plainly provides thatPage: 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