Taxpayer owns a home in Atlanta.His company transfers him to Chicago on January 2,2010,and he sells the Atlanta house in early February.He purchases a residence in Chicago on February 3,2010.On December 15,2010,taxpayer's company transfers him to Los Angeles.In January 2011,he sells the Chicago residence and purchases a residence in Los Angeles.Because multiple sales have occurred within a two-year period,§ 121 treatment does not apply to the sale of the second home.

Question

Quizplus · Accepted Answer

§ 121 of the Internal Revenue Code allows for taxpayers to exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains from the sale of a primary residence if certain requirements are met, one of which is that the taxpayer has owned and used the property as their primary residence for at least two of the previous five years. In this scenario, the taxpayer only owned and used the Atlanta home as their primary residence for one day in 2010 and did not meet the ownership and use requirements for the Chicago or Los Angeles homes. Therefore, § 121 treatment does not apply to any of the sales.

Taxpayer Owns a Home in Atlanta