Academic journal article Journal of Accountancy

Divorced Man Can't Defer Gain on Sale of Former Residence

Academic journal article Journal of Accountancy

Divorced Man Can't Defer Gain on Sale of Former Residence

Article excerpt

While married, Perry lived with his wife and daughter in a house in city A. In June 1984, he moved out but continued to pay the mortgage and other household expenses. Later that year, Perry moved to city B to live with a woman he ultimately married in 1987. Perry and his wife got divorced in December 1985. Part of the divorce agreement was that Perry's former wife and their daughter would continue to live in the house until December 1987, when it would be sold and the proceeds split. The house was sold in March 1988, and the proceeds were divided according to the divorce agreement.

On his 1988 tax return, Perry reported the sale of the house in city A but not any gain from the sale. He claimed the sale came under Internal Revenue Code section 1034, which allows a taxpayer to roll over the gain from the sale of a home if(1) it is his or her principal residence, (2) the taxpayer purchases a new residence within two years--before or after-the date the old residence is sold and (3) the cost of the new residence is equal to or greater than the adjusted sales price of the old residence. A taxpayer has to recognize gain only to the extent the cost of the new residence is less than the adjusted sales price of the old residence. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.