- quote -

Not true - as to applicability: It affects residency for
state income tax purposes. That affects, in some states,
what is taxed and what isn't, and how it can be taxed (e.g.
filing status).

If a person is a non-resident, because he was a resident of
another state when enlisted/commissioned, how can he have a
principal residence in any state other than that of
enlistment/commissioning for state income tax purposes?
(Think about it....) :-)

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- quote -

It's not a rule, it's federal law. It's the Soldiers' and
Sailors'Civil Relief Act and applies to military pay only.

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"D. Stussy" <kd6lvw[at]bde-arc.ampr.org> wrote in

- quote -

Isn't there a problem in some states where if you are
considered a "nonresident" for income tax the state tax
authority will withold on the gross proceeds of a sale of
real property?

scott s.
..

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Audrey Griffin, EA in GA wrote:

- quote -

I don't see a clear way around this for federal purposes.

For state purposes (for states that parallel the federal
system), he remained a resident of the state he first
enlisted/commissioned from, even if assigned elsewhere, so
is there any way that the state cannot say that he WASN'T a
resident on account of that property in the meantime?
[Assume that the property was in his state of origin.]

States - for income tax purposes - cannot have it both ways.
If they were to deny that it was his residence, then they
violate the above rule accepted by most (all?) that military
service doesn't change one's residency for state income tax.

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Audrey Griffin, EA in GA wrote:

- quote -

Audrey! good to see you again. Here's your hug now.

didn't live 3 of the past 5? up a creek I think; or up the
Ocmulgee?

Not aware here of any special case scenarios they would
qualify for.

How's my cousin doing over there? Tell him hello for me
next week when y'all meet. I would come over but we're
having our fall seminar same time.

Cheer$,
Harlan Lunsford, EA in LA

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griftax[at]grifsolu.com (Audrey Griffin, EA in GA) wrote:

- quote -

I'm not aware of any exception to the military relative to
the two year use test. That said, the rule requires 2 years
out of the preceding 5 years for use and ownership. Clearly
60 months less 38 months only leaves 22 months, a little
short of two years. However, isn't this a move for
employment purposes and therefore they should be able to use
the less than 24 month exception to exclude some gain. Gain
attributed to any depreciation can not be excluded. I'm
assuming that they owned and used this house as their main
home for some time prior to the PCS.

Alan
http://taxtopics.net

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griftax[at]grifsolu.com (Audrey Griffin, EA in GA) writes:

- quote -


They've been trying to remedy this situation for years.
Currently, here's what's happening wherein you may find
relief:

-----------------------------
Legislative Newsletter
October 24, 2003

AUSA helps push action on Armed Forces Tax Fairness Bill
AUSA and many other organizations of the Military Coalition
attended a press conference organized by Rep. Chet Edwards
(D-TX) to highlight the apparent unwillingness of
congressional leaders to take final action on HR 1307, the
Armed Forces Tax Fairness Act.

The legislation would overturn a ruling that requires taxing
half of the $6,000 death gratuity paid to widows of members
killed on active duty; restoring a tax deduction for travel
and lodging expenses that drilling Guard and reserve members
now pay out of their pockets if they have to travel to drill
locations more that 100 miles away from home; and restoring
capital gains tax equity with other Americans by fixing an
inadvertent 1997 law imposing large capital gains taxes on
service members who have to sell a home after extended
assignments overseas or elsewhere away from home on military
orders.

LTG (Ret.) Ted Stroup, AUSA vice president for education,
made the following statement in conjunction with the press
conference:

"On behalf of the 110,000 members of the Association of the
United States Army, I applaud the initiative of Rep. Chet
Edwards in calling a press conference to urge leaders in
both Houses of Congress to take final action to enact the
provisions of HR 1307, The Armed Forces Tax Fairness Act.
Action is long overdue and this important legislation must
become law before the Congress adjourns.

"AUSA has been working with concerned members of Congress, like Rep. Edwards,
for many years attempting to provide the tax relief in this bill for active,
Reserve Component personnel and for surviving spouses. Both the House and the
Senate have passed similar legislation, but negotiations have not produced a
final bill to forward to the President for signature. It is imperative that tax
equity be restored for service members and their survivors."

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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Military client was ordered to serve at overseas base (PCS
move). Moved out of residence and rented it from 06/01/00
until they returned to the US on 2003. They were assigned
to a base in a new state and sold the rental. I cannot see
any way that the gain can be excluded since it was rented
for the 38 months prior to the sale. Is anyone aware of any
special treatment for active duty military in this
situation? Thank you.

Audrey Griffin, EA in GA

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