1034 - 2002 Regulations clarified what could qualify...

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Section 1034 is a very generous Act that allows capital gains exclusions. In order to obtain exclusion of gain, the home must be the principal residence of two of the five years before the sale. A principal residence is the home in which the taxpayer lives. Whether or not a home is the taxpayer's principal residence depends upon all the facts and circumstances in each case. A principal residence can be a houseboat, a house trailer, or stock held by a tenant-stockholder in a cooperative housing corporation or a condominium. Rg. 1.1034-1 (c) (3); rev. rul. 64-31, 1964-1 CB 300. The $250,000 or $500,000 exlusion can still be prorated if the sale is due to a change in place of employment, a change in health, or unforeseen circumstance, even if a taxpayer does not meet the ownership, usage, or sale within two years requirement. The December
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Unformatted text preview: 2002 Regulations clarified what could qualify as "unforeseen circumstances." The following must involve the taxpayer, spouse, co-owner, or a member of the taxpayer's household to qualify: death; divorce or legal separation; becoming eligible for unemployment compensation; a change in employment that leaves the taxpayer unable to pay the mortgage or reasonable basic living expenses; and multiple births resulting from the same pregnancy. Damage to the residence resulting from a natural or man-made disaster or an act or war or terrorism, and condemnation, seizure or other involuntary conversion of the property, and other circumstances at the discretion of the IRS Commissioner could also qualify as "unforeseen."...
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