Selling Your Home
Book: 404
Table of Contents
1. OLD LAW BACKGROUND 1-1
The Evolution of Section 1034 1-2
A General Misconception 1-4
Gain “Rolled Over” Only 1-6
Total Reinvestment Unnecessary 1-9
Frequency of Sales Limited 1-10
Report Loss Sales, Also 1-12
Former Section 121 Exclusion 1-14
Exclusion Must Be “Elected” 1-15
Age & Spousal Inequity 1-16
Two Exclusions Possible 1-17
2. BACKGROUND RULINGS 2-1
Synopsis of Prior Rulings 2-2
Introduction to Snowa Case 2-4
The Relevant Snowa Facts 2-5
Section 1034 (g): The Issue 2-6
The IRS Position 2-7
Analysis by the Court 2-8
Example T.C. Memo Rulings 2-11
Example Section 121 Rulings 2-12
Ownership & Use Case 2-14
Mixed Business & Personal Use 2-16
3. NEW LAW OVERVIEW 3-1
The Exclusion: $250, 000 Per 3-2
What Congress Said 3-4
Married Filing Jointly 3-6
Meaning of “Sale or Exchange” 3-8
When Less Than 2 Years 3-10
Clarifying an Ambiguity 3-13
Other Prorata Exclusions 3-15
The “Whole Works” Outlined 3-16
4. SPECIAL SITUATION RULES 4-1
Within or Near the “Gap Period” 4-2
Within 2 Years After Enactment 4-4
Sale of Remainder Interests 4-5
Periods of Out-of-Residence Care 4-7
Property of Deceased Spouse 4-8
Tenant-Stockholder in Co-op Housing 4-10
Equity Sharing Arrangements 4-11
Reacquired Residence Resold 4-12
Joint Returns with Unforeseens 4-14
Overwhelming “Relief” Intent 4-16
5. BROKER REPORTED SALES 5-1
Introduction to Section 6045(e) 5-2
Statement Furnished to You 5-4
Exception for “Certain” Sales 5-6
IRS Announcement 97-106 5-8
Title Passing Is “Sale” 5-9
Sale Procedures Confusion 5-10
Clarify Co-Owner Percentages 5-13
Culling Those Papers 5-14
6. BASIS OF RESIDENCE SOLD 6-1
Methods of Acquisition 6-2
Must Be “Principal Residence” 6-4
Surrounding Acreage Limited 6-5
Term “Basis” Defined 6-6
Basis When Purchased 6-8
Personal Items Discounted 6-10
Basis When Gifted 6-11
Basis When Inherited 6-13
Improvements Add to Basis 6-15
Adjustments to Basis 6-17
Basis Rules Summarized 6-18
7. CLAIMING YOUR EXCLUSION 7-1
Exclusion Not Automatic 7-2
The “Exact Matching” Trap 7-3
Escrow Closing Statement 7-4
Overview of Form 2119 7-6
Exclude Personal Items 7-8
Selling Expenses: Escrow 7-10
Expenses Outside of Escrow 7-11
Establishing Your Gain 7-11
Apply “Proper” Exclusion 7-13
Gain in Excess of Exclusion 7-16
8. EFFECT OF DIVORCE 8-1
Date of “Final” Important 8-2
Property Settlement Terms 8-4
Attorney Fees and Debt Liens 8-5
Transfer Between Spouses 8-6
Basis to Transferee Spouse 8-8
When Not to Quitclaim 8-9
New Special Rule: Sec. 121(d)(3) 8-10
Move-Out Spouse’s Use Period 8-12
The 50/50 Presumption 8-14
Non-50-50 Fractional Interests 8-16
Negotiate for Separate 1099s 8-18
9. PRORATA BUSINESS USE 9-1
New Law Reminder 9-2
It’s Like “Two Sales” 9-4
The “Business Use” Question 9-5
Introduction to Form 4797 9-6
Office-in-Home Depreciation 9-7
Sale With Rental Unit (s) 9-11
Sale With Subdivided Land 9-13
Allocation in Sales Contract 9-14
10. INVOLUNTARY CONVERSION 10-1
What Section 121 Says 10-2
Introduction to Section 1033 10-3
“Threat or Imminence” of Condemnation 10-5
Replacement Period Misjudgments 10-7
Back to Section 121(d)(5)(B) 10-9
Holding Period Tack-On 10-10
Election to Replace…or Not to 10-12
Presidentially Declared Disasters 10-14
Read Insurance “Fine Print” 10-15
How to Tax Report 10-17
11. TREATMENT OF LOSSES 11-1
How Loss is Determined 11-2
Scenarios for Loss 11-4
Overview of Section 165 11-5
Subsections (a), (b), & (c) Explained 11-7
Introduction to Form 4684 11-9
Disaster Loss Election 11-10
NOL Carryback Years 11-12
Conversion To Rental Residence 11-14
Principal Place of Business 11-15
12. PARLAYING YOUR NEST EGG 12-1
Section 121 (New) Revisited 12-2
No Gimmick Tax Accounting 12-4
Lifespan of Home Ownerships 12-7
Better than IRAs, 401(k)s, SEPs, etc. 12-8
Maximizing Exclusion Amounts 12-10
Set Goal to Pay Off Mortgage 12-11
Indexing Your Cost Basis 12-13
Selling & Buying Lower 12-15
Your “Final” Sale 12-17 |
