Source: http://us-code.vlex.com/vid/exclusion-gain-principal-residence-19211048
Timestamp: 2015-05-29 02:02:12
Document Index: 477437090

Matched Legal Cases: ['§301', '§403', '§542', '§542', '§301', '§3092', '§7', '§417', '§11', '§840', '§101', '§542', '§312', '§6005', '§6011', '§123', '§404', '§1404', '§206', '§1074', '§404', '§2']

26 USC 121 - Sec. 121. Exclusion of gain from sale of principal residence - U.S. Code - VLEX 19211048
26 USC 121 - Sec. 121. Exclusion of gain from sale of principal residence
Quotes:26 USC Sec. 121
(a) ExclusionGross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer's principal residence for periods aggregating 2 years or more.
(b) Limitations(1) In generalThe amount of gain excluded from gross income under subsection (a) with respect to any sale or exchange shall not exceed $250,000.
(B) Other joint returnsIf such spouses do not meet the requirements of subparagraph (A), the limitation under paragraph (1) shall be the sum of the limitations under paragraph (1) to which each spouse would be entitled if such spouses had not been married. For purposes of the preceding sentence, each spouse shall be treated as owning the property during the period that either spouse owned the property.
(3) Application to only 1 sale or exchange every 2 years(A) In generalSubsection (a) shall not apply to any sale or exchange by the taxpayer if, during the 2-year period ending on the date of such sale or exchange, there was any other sale or exchange by the taxpayer to which subsection (a) applied.
(B) Pre-May 7, 1997, sales not taken into accountSubparagraph (A) shall be applied without regard to any sale or exchange before May 7, 1997.
(4) 1 Special rule for certain sales by surviving spousesIn the case of a sale or exchange of property by an unmarried individual whose spouse is deceased on the date of such sale, paragraph (1) shall be applied by substituting “$500,000” for “$250,000” if such sale occurs not later than 2 years after the date of death of such spouse and the requirements of paragraph (2)(A) were met immediately before such date of death.
(4) 1 Exclusion of gain allocated to nonqualified use(A) In generalSubsection (a) shall not apply to so much of the gain from the sale or exchange of property as is allocated to periods of nonqualified use.
(B) Gain allocated to periods of nonqualified useFor purposes of subparagraph (A), gain shall be allocated to periods of nonqualified use based on the ratio which—
(C) Period of nonqualified useFor purposes of this paragraph—
(i) In generalThe term “period of nonqualified use” means any period (other than the portion of any period preceding January 1, 2009) during which the property is not used as the principal residence of the taxpayer or the taxpayer's spouse or former spouse.
(ii) ExceptionsThe term “period of nonqualified use” does not include—
(D) Coordination with recognition of gain attributable to depreciationFor purposes of this paragraph—
(c) Exclusion for taxpayers failing to meet certain requirements(1) In generalIn the case of a sale or exchange to which this subsection applies, the ownership and use requirements of subsection (a), and subsection (b)(3), shall not apply; but the dollar limitation under paragraph (1) or (2) of subsection (b), whichever is applicable, shall be equal to—
(2) Sales and exchanges to which subsection appliesThis subsection shall apply to any sale or exchange if—
(d) Special rules(1) Joint returnsIf a husband and wife make a joint return for the taxable year of the sale or exchange of the property, subsections (a) and (c) shall apply if either spouse meets the ownership and use requirements of subsection (a) with respect to such property.
(2) Property of deceased spouseFor purposes of this section, in the case of an unmarried individual whose spouse is deceased on the date of the sale or exchange of property, the period such unmarried individual owned and used such property shall include the period such deceased spouse owned and used such property before death.
(3) Property owned by spouse or former spouseFor purposes of this section—
(A) Property transferred to individual from spouse or former spouseIn the case of an individual holding property transferred to such individual in a transaction described in section 1041(a), the period such individual owns such property shall include the period the transferor owned the property.
(B) Property used by former spouse pursuant to divorce decree, etc.Solely for purposes of this section, an individual shall be treated as using property as such individual's principal residence during any period of ownership while such individual's spouse or former spouse is granted use of the property under a divorce or separation instrument (as defined in section 71(b)(2)).
(4) Tenant-stockholder in cooperative housing corporationFor purposes of this section, if the taxpayer holds stock as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), then—
(5) Involuntary conversions(A) In generalFor purposes of this section, the destruction, theft, seizure, requisition, or condemnation of property shall be treated as the sale of such property.
(B) Application of section 1033In applying section 1033 (relating to involuntary conversions), the amount realized from the sale or exchange of property shall be treated as being the amount determined without regard to this section, reduced by the amount of gain not included in gross income pursuant to this section.
(C) Property acquired after involuntary conversionIf the basis of the property sold or exchanged is determined (in whole or in part) under section 1033(b) (relating to basis of property acquired through involuntary conversion), then the holding and use by the taxpayer of the converted property shall be treated as holding and use by the taxpayer of the property sold or exchanged.
(6) Recognition of gain attributable to depreciationSubsection (a) shall not apply to so much of the gain from the sale of any property as does not exceed the portion of the depreciation adjustments (as defined in section 1250(b)(3)) attributable to periods after May 6, 1997, in respect of such property.
(7) Determination of use during periods of out-of-residence careIn the case of a taxpayer who—
(8) Sales of remainder interestsFor purposes of this section—
(A) In generalAt the election of the taxpayer, this section shall not fail to apply to the sale or exchange of an interest in a principal residence by reason of such interest being a remainder interest in such residence, but this section shall not apply to any other interest in such residence which is sold or exchanged separately.
(B) Exception for sales to related partiesSubparagraph (A) shall not apply to any sale to, or exchange with, any person who bears a relationship to the taxpayer which is described in section 267(b) or 707(b).
(9) Uniformed services, Foreign Service, and intelligence community(A) In generalAt the election of an individual with respect to a property, the running of the 5-year period described in subsections (a) and (c)(1)(B) and paragraph (7) of this subsection with respect to such property shall be suspended during any period that such individual or such individual's spouse is serving on qualified official extended duty—
(B) Maximum period of suspensionThe 5-year period described in subsection (a) shall not be extended more than 10 years by reason of subparagraph (A).
(C) Qualified official extended dutyFor purposes of this paragraph—
(i) In generalThe term “qualified official extended duty” means any extended duty while serving at a duty station which is at least 50 miles from such property or while residing under Government orders in Government quarters.
(ii) Uniformed servicesThe term “uniformed services” has the meaning given such term by section 101(a)(5) of title 10, United States Code, as in effect on the date of the enactment of this paragraph.
(iii) Foreign Service of the United StatesThe term “member of the Foreign Service of the United States” has the meaning given the term “member of the Service” by paragraph (1), (2), (3), (4), or (5) of section 103 of the Foreign Service Act of 1980, as in effect on the date of the enactment of this paragraph.
(iv) Employee of intelligence communityThe term “employee of the intelligence community” means an employee (as defined by section 2105 of title 5, United States Code) of—
(v) Extended dutyThe term “extended duty” means any period of active duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.
(D) Special rules relating to election(i) Election limited to 1 property at a timeAn election under subparagraph (A) with respect to any property may not be made if such an election is in effect with respect to any other property.
(ii) Revocation of electionAn election under subparagraph (A) may be revoked at any time.
(10) Property acquired in like-kind exchangeIf a taxpayer acquires property in an exchange with respect to which gain is not recognized (in whole or in part) to the taxpayer under subsection (a) or (b) of section 1031, subsection (a) shall not apply to the sale or exchange of such property by such taxpayer (or by any person whose basis in such property is determined, in whole or in part, by reference to the basis in the hands of such taxpayer) during the 5-year period beginning with the date of such acquisition.
[(11) Repealed. Pub. L. 111–312, title III, §301(a), Dec. 17, 2010, 124 Stat. 3300](12) Peace Corps(A) In generalAt the election of an individual with respect to a property, the running of the 5-year period described in subsections (a) and (c)(1)(B) and paragraph (7) of this subsection with respect to such property shall be suspended during any period that such individual or such individual's spouse is serving outside the United States—
(B) Applicable rulesFor purposes of subparagraph (A), rules similar to the rules of subparagraphs (B) and (D) 2 shall apply.
(e) Denial of exclusion for expatriatesThis section shall not apply to any sale or exchange by an individual if the treatment provided by section 877(a)(1) applies to such individual.
(f) Election to have section not applyThis section shall not apply to any sale or exchange with respect to which the taxpayer elects not to have this section apply.
(g) Residences acquired in rollovers under section 1034For purposes of this section, in the case of property the acquisition of which by the taxpayer resulted under section 1034 3 (as in effect on the day before the date of the enactment of this section) in the nonrecognition of any part of the gain realized on the sale or exchange of another residence, in determining the period for which the taxpayer has owned and used such property as the taxpayer's principal residence, there shall be included the aggregate periods for which such other residence (and each prior residence taken into account under section 1223(6) in determining the holding period of such property) had been so owned and used.
References in TextThe date of the enactment of this paragraph, referred to in subsec. (d)(9)(C)(ii), (iii), is the date of enactment of Pub. L. 108–121, which was approved Nov. 11, 2003.
CodificationPub. L. 109–135, title IV, §403(ee)(1), (nn), Dec. 21, 2005, 119 Stat. 2631, 2632, which directed that subsec. (d) of this section be amended by redesignating the paragraph (10) relating to property acquired from a decedent as paragraph (11), effective as if included in the provisions to which such amendment relates of the American Jobs Creation Act of 2004, Pub. L. 108–357, was executed as the probable intent of Congress by redesignating as paragraph (11) the paragraph (10) directed to be added to subsec. (d) of this section by Pub. L. 107–16, §542(c), (f)(1), applicable to estates of decedents dying after Dec. 31, 2009. See Codification note, 2001, 2003, and 2005 Amendment notes, and Effective Date of 2005 Amendment note below.
Prior ProvisionsA prior section 121 was renumbered section 140 of this title.
2010—Subsec. (d)(11). Pub. L. 111–312 amended subsec. (d) to read as if amendment by Pub. L. 107–16, §542(c), which originally added par. (9), had never been enacted. See Codification notes above and 2001 Amendment note and Effective Date of 2010 Amendment note below. Prior to amendment, par. (11) read as follows: “Property acquired from a decedent.—The exclusion under this section shall apply to property sold by—
Effective and Termination Dates of 2010 AmendmentPub. L. 111–312, title III, §301(e), Dec. 17, 2010, 124 Stat. 3301, provided that: “Except as otherwise provided in this section, the amendments made by this section [amending this section and sections 170, 684, 1014, 1040, 1221, 1246, 1291, 1296, 2505, 4947, 6018, 6019, 6075, and 7701 of this title and repealing sections 1022, 2210, 2664, and 6716 of this title] shall apply to estates of decedents dying, and transfers made, after December 31, 2009.”
Effective Date of 2008 AmendmentPub. L. 110–289, div. C, title III, §3092(b), July 30, 2008, 122 Stat. 2912, provided that: “The amendment made by this section [amending this section] shall apply to sales and exchanges after December 31, 2008.”
Effective Date of 2007 AmendmentPub. L. 110–142, §7(b), Dec. 20, 2007, 121 Stat. 1806, provided that: “The amendment made by this section [amending this section] shall apply to sales or exchanges after December 31, 2007.”
Effective Date of 2006 AmendmentPub. L. 109–432, div. A, title IV, §417(e), Dec. 20, 2006, 120 Stat. 2966, as amended by Pub. L. 110–172, §11(a)(11)(B), Dec. 29, 2007, 121 Stat. 2485, provided that: “The amendments made by this section [amending this section] shall apply to sales or exchanges after the date of the enactment of this Act [Dec. 20, 2006].”
Effective Date of 2005 AmendmentAmendment by section 402(a)(3) of Pub. L. 109–135 effective as if included in the provisions of the Energy Policy Act of 2005, Pub. L. 109–58, to which it relates, but not applicable with respect to any transaction ordered in compliance with the Public Utility Holding Company Act of 1935 (15 U.S.C. 79 et seq.) before its repeal, see section 402(m) of Pub. L. 109–135, set out as an Effective and Termination Dates of 2005 Amendments note under section 23 of this title.
Effective Date of 2004 AmendmentPub. L. 108–357, title VIII, §840(b), Oct. 22, 2004, 118 Stat. 1597, provided that: “The amendment made by this section [amending this section] shall apply to sales or exchanges after the date of the enactment of this Act [Oct. 22, 2004].”
Effective Date of 2003 AmendmentPub. L. 108–121, title I, §101(b), Nov. 11, 2003, 117 Stat. 1336, provided that:
Effective Date of 2001 AmendmentPub. L. 107–16, title V, §542(f), June 7, 2001, 115 Stat. 86, provided that:
Effective Date of 1997 AmendmentPub. L. 105–34, title III, §312(d), Aug. 5, 1997, 111 Stat. 841, as amended by Pub. L. 105–206, title VI, §6005(e)(3), July 22, 1998, 112 Stat. 806, provided that:
“(1) In general.—The amendments made by this section [amending this section and sections 25, 32, 56, 143, 163, 215, 280A, 464, 512, 1016, 1033, 1038, 1223, 1250, 1274, 6012, 6045, 6212, 6334, 6504, and 7872 of this title and repealing section 1034 of this title] shall apply to sales and exchanges after May 6, 1997.
Effective Date of 1988 AmendmentPub. L. 100–647, title VI, §6011(b), Nov. 10, 1988, 102 Stat. 3691, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to any sale or exchange after September 30, 1988, in taxable years ending after such date.”
Effective Date of 1981 AmendmentPub. L. 97–34, title I, §123(b), Aug. 13, 1981, 95 Stat. 197, provided that: “The amendment made by this section [amending this section] shall apply to residences sold or exchanged after July 20, 1981.”
Effective Date of 1978 AmendmentPub. L. 95–600, title IV, §404(d)(1), Nov. 6, 1978, 92 Stat. 2870, provided that: “The amendments made by this section [amending this section and sections 1033, 1034, 1038, 1250, and 6012 of this title] shall apply to sales or exchanges after July 26, 1978, in taxable years ending after such date.”
Effective Date of 1976 AmendmentPub. L. 94–455, title XIV, §1404(b), Oct. 4, 1976, 90 Stat. 1733, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1976.”
Effective DatePub. L. 88–272, title II, §206(c), Feb. 26, 1964, 78 Stat. 40, provided that: “The amendments made by this section [enacting this section, redesignating former section 121 as 122, and amending sections 1033, 1034, and 6012 of this title] shall apply to dispositions after Dec. 31, 1963, in taxable years ending after such date.”
Sense of Congress Concerning Tax Treatment of Principal Residence of Members of Armed Forces While Away From Home on Active DutyPub. L. 105–261, div. A, title X, §1074, Oct. 17, 1998, 112 Stat. 2138, provided that: “It is the sense of Congress that a member of the Armed Forces should be treated for purposes of section 121 of the Internal Revenue Code of 1986 as using property as a principal residence during any continuous period that the member is serving on active duty for 180 days or more with the Armed Forces, but only if the member used the property as a principal residence for any period during or immediately before that period of active duty.”
Transitional Rule in Case of Sale or Exchange of Residence Before July 26, 1981Pub. L. 95–600, title IV, §404(d)(2), Nov. 6, 1978, 92 Stat. 2870, as amended by Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that: “In the case of a sale or exchange of a residence before July 26, 1981, a taxpayer who has attained age 65 on the date of such sale or exchange may elect to have section 121 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] applied by substituting ‘8-year period’ for ‘5-year period’ and ‘5 years’ for ‘3 years’ in subsections (a), (d)(2), and (d)(5) of such section.”
10 USC 7086 - Sec. 7086. Physical disability retirement