Sec. 121 gain exclusion on sale of principal residence cannot be marked to market.

• Jurisdiction: United States
• Author: Kautter, David J.
• Date: 01 January 2002

In Rev. Rul. 2001-57, the Service ruled that if an individual were to elect under Section 311(e) of the Taxpayer Relief Act of 1997 (TRA '97) to treat his principal residence as being both sold and reacquired on Jan. 2001 for an amount equal to its fair market value (FMV) on that date, he could not exclude the gain resulting from the deemed sale from gross income under Sec. 121.

Background

Under Sec. 1(h)(2)(B) (as amended by TRA '97 Section 311), for tax years beginning after 2000, the maximum capital gain rate for assets held more than five years was reduced from 20% to 18%. The 18% rate generally applies only to...