Source: https://www.mass.gov/directive/directive-88-20-sale-of-principal-residence-massachusetts-gross-income
Timestamp: 2018-04-25 21:45:17
Document Index: 427062656

Matched Legal Cases: ['§ 121', '§ 121', '§ 2', '§ 121', '§ 121', '§ 121', '§ 121', '§ 121', '§ 121', '§ 2']

Directive 88-20: Sale of Principal Residence; Massachusetts Gross Income | Mass.gov
Directive Directive 88-20: Sale of Principal Residence; Massachusetts Gross Income
FACTS: Able sold his principal residence in New Jersey in 1979. He did not reinvest the proceeds in a new house but made a one-time election excluding his gain from federal gross income, as allowed under § 121 of the Internal Revenue Code to persons over 55. In 1983, Able bought a principal residence in Massachusetts which he sold in 1988.
ISSUE: Since Able's federal § 121 election did not affect his Massachusetts taxable income, may he now elect to exclude the gain from the 1988 sale of his Massachusetts residence?
DISCUSSION: With exceptions not relevant here, Massachusetts gross income is the same as federal gross income in any given tax year. G.L. c. 62, § 2(a). At the federal level, a taxpayer may elect once to exclude from his federal gross income up to $125,000 of gain on the sale of a principal residence if certain requirements are met. I.R.C. § 121(a).
Because federal gross income and Massachusetts gross income are generally the same, if a taxpayer makes the federal election his federal gross income will not include the gain, and neither will his Massachusetts gross income for that year. Conversely, if a taxpayer either cannot or does not make a § 121 election in a given tax year, the entire amount of the gain must be included in his Massachusetts gross income (unless excluded under some other provision of law).
DIRECTIVE: Able made his § 121 election in 1979 when he excluded the gain from the sale of his New Jersey residence from his federal gross income. This election may be made only once; Able, therefore, cannot now elect § 121 treatment on the sale of his Massachusetts residence. I.R.C. § 121(b)(2). Since his federal gross income will include the gain realized, the gain is part of his Massachusetts gross income as well.
REFERENCE: I.R.C. § 121(a), (b)(2); G.L. c. 62, § 2(a).
DD 88-20