Ed Zollars, CPA wrote:
- quote -

Which is a reasonable approach to this. The law often uses
a "reasonable person" standard rather than a subjective test,
since it is easier to prove and seems to be more fair since
everyone is treated the same. And IRS regulations are
generally upheld if they are reasonable in light of statutory
language.

For example, imagine a situation which anyone with any common
sense would have forseen, but the taxpayer claims he, personally,
didn't foresee it. "I'm an idiot. Just ask my ex-wife!"

Stu

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Arthur L. Rubin wrote:

- quote -

True--but if you read the IRS Temporary Regulations and the
examples they give and the factors to be considered on the
"facts and circumstances" test, you'll see that they tend to
concentrate of whether the event was "foreseeable" rather
than actually foreseen.

For instance, the traffic example, where the individual was
aware there was a major road near the property, but only
after actually living there did he decide he couldn't live
with the noise. Arguably, the didn't foresee the problem,
but the IRS would argue a reasonable person should have
foreseen the possibility--so it was foreseeable even if he
didn't see it.

It might also explain the single birth vs. multiple birth
scenario in a roundabout way. A pregnancy is a reasonable
possibility arising out of certain activities <grin> , but
multiple births are rare enough that the IRS didn't feel it
rose to the level of being an issue.

So while foreseeable is not in the law, it is useful as a
"first shot" test if you are looking at the "facts and
circumstances" test. If you have to argue that while it was
foreseeable, it wasn't foreseen, the chances of winning your
case are likely not good <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

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- quote -

Does an unforseen marriage tie in with the multiple birth
exclusion?

--
Don EA in Upstate NY

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Ed Zollars, CPA wrote:
- quote -

The law and regulations use "unforseen", not "unforseeable".

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"Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote:
- quote -

ahhhhh.....now to build the case for the
circumstances.....thanks
this is a remarriage of the couple who
divorced......certainly not expected........

--
jtamchay[at]yahoo.com

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jtc wrote:

- quote -

While you don't meet any of the safe harbors, you have the
"general" facts and circumstances test under the temporary
regulations and I suppose with the right additional facts
and a sympathetic judge you *might* be able to make the case
for the exclusion.

To me the key initial issue is whether the marriage was
"foreseeable" when the new residence was occupied. The
general idea of the regulation was that Congress didn't want
a break to go to someone who had no intention of meeting the
two year test, to prevent someone from "gaming" the system
outside the bright line test of the law, but to grant relief
to those who really did have a change in circumstance they
could not have anticipated.

So the taxpayer *MIGHT* have a chance here--but it's going
to depend on developing a facts and circumstances case based
upon what happened and then applying that to the
considerations in the regulations.

--
Ed Zollars, CPA
Phoenix, Arizona

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"Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote:
- quote -

marriage...and I don't see that as an exclusion

--
jtamchay[at]yahoo.com

================================================== ==========
Moderator: One more example of marriage as a tax problem <g================================================ ============

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jtc wrote:

- quote -

Penalty? No, but rather he won't get the benefit of the
exclusion of the gain because he will fail both the
ownership and use tests, *unless* the reason for the sale is
one of the "special" ones that allows for use of a portion
of the $250,000/$500,000 exclusion.

And, yes, I realize that it certainly *looks* like a penalty
<grin> , but under the tax law a penalty is something imposed
in addition to the regular tax. In this case, you would be
denied a break (a different, though hardly less painful,
problem).

So the key issue is this--why is this residence being sold?
Generally, unforeseeable circumstances will qualify, but
simply selling because the price is now too good to pass up
won't <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

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I have looked at the info myself and realize that I will not
meet any of the exclusions for the proration.....I am
getting remarried and we will live in my new husbands
home.......probaly best to look at filing a non joint return
vs. mfj

--
jtamchay[at]yahoo.com

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- quote -

It's not a penalty. It is capital gains tax and you only
have to pay if you sell at a profit and then, only on the
profit.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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- quote -

The former home is irrelevant. Tax may or may not be due on
the capital gain from sale of the current residence. See
IRS Publication 523.

Phil Marti
Topeka, KS

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seller(Minnesota) has owned home for 19
months.....previously had owned a first home home which was
sold in divorce.That home was held for 15 months. Will
seller have to pay a penalty for selling current residence
before 2 years?

--
jtamchay[at]yahoo.com
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