Section 121 Question

[JoshinNC]

Seems like there have been alot of these lately.

Client owns land on which he has his personal residence (singlewide mobile home) since 1995. In 2004 client sells singlewide and buys doublewide, which he puts on the property. Client then sells doublewide and land together in 2005 at a gain of about $30,000. Does client get to exclude gain from sale, even though he technically did not live in the doublewide for 2 out of 5 years. He did live on the land, which was attached to the doublewide in the sale docs (sold as real property, including all attachments). Had not thought about this before, but it is a very relevant application of the law.

Thanks in advance!

[OldJack]

The change in the residence in this case should not be important. The taxpayer owned and lived on the "residential property" that is being sold and should qualify for exclusion under §121. Replacing or remodeling the residence should have no effect on the qualifications as it is still the same residential property as evidenced by the real estate deed. Interesting question, and above results subject to change, as to how did he report the sale of the singlewide?

[Jan]

I probably wouldn’t report it as income either, but if your going by the tax law, all income should be reported, I have a friend who is a retired IRS agent, I use to do his taxes when he was still working, he show $20.00 as other income on line 21, I ask him what the income was, he said his neighbor borrowed his lawn mower one week-end and gave him $20.00. I said we don't normally report income like that, he said, I know, but his neighbor was another IRS agent, he wasn't sure if he would report him. What a way to live, always in fear.

[Jan]

Sorry, posted in wrong area

[Unregistered]

singlewide was sold at a loss

His cost basis was $32,000, sold for $7000. I couldn't figure out a way to deduct the loss, since a loss on sale of personal residence is non-deductible, right?

JoshInNC