Gain on personal residence

[Snaggletooth]

Couple has only lived in residence one year. Looking at a profit of $100,000. Two years are required to avail them to the exemption.

There are some circumstances which can still qualify them for an exemption. I am wondering whether having their first child can exempt them. Their current residence has stairs and upstairs and other factors not conducive for a small child.

Does anyone think this may be a circumstance qualifying for an exemption?

[TAXNJ]

Can't find

Couple has only lived in residence one year. Looking at a profit of $100,000. Two years are required to avail them to the exemption.

There are some circumstances which can still qualify them for an exemption. I am wondering whether having their first child can exempt them. Their current residence has stairs and upstairs and other factors not conducive for a small child.

Does anyone think this may be a circumstance qualifying for an exemption?

Heard of the Child tax credit (different issue) but don't think the one listed in the post will pass. Could be wrong and interesting if it would. Maybe recommend "child gates" until the two years are required to avail them to the exemption.

Wonder if the style and/or color, etc. of a house that would be not conducive for an owner and therefore qualify for an exception! These type of exemptions may be great for realtors.

You can Reference U.S. Code § 121 - (C) for exceptions.

Good luck

[Black Bart]

Couple has only lived in residence one year. Looking at a profit of $100,000. Two years are required to avail them to the exemption.

There are some circumstances which can still qualify them for an exemption. I am wondering whether having their first child can exempt them. Their current residence has stairs and upstairs and other factors not conducive for a small child.

Does anyone think this may be a circumstance qualifying for an exemption?

Looks like you have some creative thinking in front of you, Snag. Check out this guy: http://www.groco.com/readingroom/tax...residence.aspx

He lists: (to pro-rate the less-than-two-year occupation)
..."what the IRS calls “unforeseen circumstances” (examples include death, natural or man-made disasters, multiple births form the same pregnancy, divorce) These circumstances also have to cause you to sell your home. Factors used by the IRS to determine causation include:
• Your sale and the circumstances causing it were close in time,
•The circumstances causing your sale occurred during the time you owned and used the property as your main home,
•The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home,
•Your financial ability to maintain your home materially changed, and
•The suitability of your property as a home materially changed...."

I've been in the same spot; trying every which way possible to come up with something half-way (or half-baked) reasonable excuse to get 'em out of this disastrously-high tax.

Hmm, it could be that the wife found the house "offensive" in some sense (maybe the prior owner installed mirrors on the ceiling?); that's a reason currently in vogue for almost anything nowadays. Or let's see, if the pregnancy was unplanned, could the kid's birth possibly be construed as a "man-made disaster"? If you are acquainted with a jack-leg lawyer, he might have some enlightening suggestions. Well, if nothing else, it should be an interesting professional and/or ethical challenge.

P.S. Please note that I, taking note of your recent objection to my sermon on "client satisfaction", am under no circumstances suggesting that you pay the tax for said customer.

Regards, BB

[taxea]

Really! The child probably can't even walk yet. I would think the IRS position would be thousands if not millions of families live in a two story house...can child be put on the first floor...sounds like a personal problem to me. Tell them to bite the bullet for a year so they can take the exemption.

[Lion]

Pretty nice profit for one year! Where do they live? Did you take into account buying & selling expenses, improvements, etc.? What's their capital gain rate? What would their increase in taxes actually be? Let them decide if the tax is worth or not worth waiting out another year.

[Black Bart]

Really! The child probably can't even walk yet. I would think the IRS position would be thousands if not millions of families live in a two story house...can child be put on the first floor...sounds like a personal problem to me. Tell them to bite the bullet for a year so they can take the exemption.


Believe nothing until you know where and how to verify it.

Did you ever consider giving up this line of work and applying for a position as an IRS auditor?

[TAXNJ]

Great

Did you ever consider giving up this line of work and applying for a position as an IRS auditor?

Great job with guaranteed pay; benefits and hours. Are you aware of any openings you can share?

[Roland Slugg]

IRS Pub 523 says under "Unforeseeable events" on page 4, "3. Gave birth to two or more children from the same pregnancy." Thus, your clients clearly don't qualify there. I doubt if that rule is contained in the Code, but it may be in the Regs. Even if it's not, it was surely created by the IRS under its authority to adopt Regs and rules necessary to implement and enfore the intent of the Code.

IMO your clients are out of luck on the exclusion issue unless they have something better than, "We had a baby."

I, too, have had clients who bought a house, then decided they didn't like it, or found one they liked better, or simply wanted to cash-in on a hefty FMV increase. As others have suggested above, they simply have to factor in the tax cost, along with the other selling costs, and decide if they're willing to absorb all that. As long as they own the house at least one full year, the gain will be long-term.

[TAXNJ]

More info

As mentioned in prior reply post reference sec 121 (c) Unforeseen circumstances. In addition see link below for regs and Private Letter Rulings (PLR) that might be of interest (single birth does not seem to count but see some of the PLR that may or may not apply.

http://www.journalofaccountancy.com/issues/2009/nov/20091783.html

[Snaggletooth]

Thanks to All

Thanks to everyone who has responded. Based on the responses and links, I don't think the birth of a single child would qualify. If the client can justify any of the other reasons, I'll try to "shoehorn" it in if I can do so and still be professional.

[taxea]

How long does it take to get a private letter ruling?

[TAXNJ]

Some guidance

How long does it take to get a private letter ruling?

See below

http://www.journalofaccountancy.com/issues/2010/jan/20092143.html

[Black Bart]

Great job with guaranteed pay; benefits and hours. Are you aware of any openings you can share?

Actually I wasn't talking to you, but no, I'm not aware of any openings IRS has. However, with your vast repertoire of citations, I'm sure you'll find something suitable.

[TAXNJ]

Thank you

Actually I wasn't talking to you, but no, I'm not aware of any openings IRS has. However, with your vast repertoire of citations, I'm sure you'll find something suitable.

How kind and complimentary you are and sounds like you are happy and having another good day. Stay well😀

[Burke]

•The suitability of your property as a home materially changed...."

I like this one. Really?