Sec.121 and deceased taxpayer

[RLymanC]

Married couple lived in house for 15 years. Wife died this year.
Property cannot be sold untill 2007. He will be required to file single in 2007.

Does he loose $250,000 of the $500,000 exclusion?

[Brad Imsdahl]

The exclusion drops to $250,000, however, he receives a step up of basis for his wife's half, assuming she owned the house as a joint tenant. If they lived in a community property state, he would get full step up. See TTB, page 21-28.

[RLymanC]

Brad

Is there a Tab number associated with those page numbers? Can't find the pages you refere to.

[OldJack]

Is there a Tab number associated with those page numbers? Can't find the pages you refere to.

The reference is to the "Fat Book" which has a tab 21, "Estates, Trusts, & Fiduciaries".

[Unregistered]

The exclusion drops to $250,000, however, he receives a step up of basis for his wife's half, assuming she owned the house as a joint tenant. If they lived in a community property state, he would get full step up. See TTB, page 21-28.

Only if it was titled as community property. As a general rule, if property is held jointly with right of survivorship, it's not community property.