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Form 1040, U.S. Individual Income Tax Return, for the taxable
year 1994 (1994 tax return). On their 1994 tax return,
petitioners excluded from gross income their $53,226 capital
gain. By way of explanation, they attached Form 2119, Sale of
Your Home, to their 1994 tax return. On Line 9 of Form 2119,
petitioners marked “Yes” to the question: “If you haven’t
replaced your home, do you plan to do so within the replacement
period?”5
Petitioners, however, did not purchase a replacement home
within the replacement period.6 On March 22, 2001, petitioners
filed an amended return for the taxable year 1994. On the
amended return, petitioners reported the $53,226 capital gain
from the sale of their primary residence, and the tax due of
$14,360 on the additional income. In Part II, Explanation of
Changes to Income, Deductions, and Credits, of the amended
5 Instructions for Form 2119 set forth additional filing
requirements, which state, in pertinent part:
You must file Form 1040X, Amended U.S. Individual
Income Tax Return, for the year of sale with the second
Form 2119 attached if any of the following apply:
* * * * * * *
2. You planned to replace your home when you
filed your tax return but did not do so within the
replacement period.
6 For the year in issue, the replacement period begins 2
years before the date of the sale of a taxpayer’s principal
residence and ends 2 years after such date. Sec. 1034(a).
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