- 17 -
6504(4) provides that the period of limitations for gain upon the
sale or exchange of a taxpayer’s principal residence is to be
found under section 1034(j).
Reading section 1034(j) as a whole, we understand that the
provision integrates the period of limitations for taxpayers who
elect the tax benefits of section 121 and section 1034, either
singly or in combination. In particular, when a taxpayer
notifies the Commissioner that he has sold his principal
residence, and he does not intend to purchase a new principal
residence within the statutory replacement period, section
1034(j)(1)(B) provides that the period of limitations on
assessment will expire 3 years from the date that notice is
filed. Consistent with this provision, Form 2119 is arranged so
that the taxpayer may immediately elect to exclude up to $125,000
of gain from gross income under section 121, as appropriate. On
the other hand, if a taxpayer notifies the Commissioner that he
has sold his principal residence and he intends to purchase a new
principal residence within the statutory replacement period,
section 1034(j)(1)(A) and (C) provides that the period of
limitations on assessment will expire 3 years from the date the
taxpayer notifies the Commissioner: (1) Of the purchase price of
the taxpayer’s new principal residence or (2) the taxpayer’s
failure to purchase a new principal residence within the
statutory replacement period. Consistent with these provisions,
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