A taxpayer whose principal residence is destroyed in a fire can use both the § 121 (sale of residence gain exclusion) and the § 1033 (involuntary conversion postponement of gain) provisions.

Question

Quizplus · Accepted Answer

The taxpayer can use both provisions as long as they meet the qualifications for each provision. They can exclude up to $250,000 ($500,000 for married filing jointly) of gain from the sale of their principal residence under § 121, and can postpone any remaining gain by using § 1033 due to the involuntary conversion of their property.

A Taxpayer Whose Principal Residence Is Destroyed in a Fire