Form 2119, Sale of Your Home.

On February 1, 1993, Tax Executives Institute submitted the following comments to the Internal Revenue Service on Form 2119, Sale of Your Home. The comments were prepared under the aegis of the Institute's IRS Administrative Affairs Committee, whose chair is W. Remi Taylor of Duke Power Company.

On behalf of Tax Executives Institute, I am pleased to submit the following comments on Form 2119 (Sale of Your Home). In your request, you requested comments: (1) the form's "degree of difficulty" -- whether it is logical and easy to follow; (2) the readability of the instructions; and (3) the form's completeness and "comprehensibility" -- whether the instructions answer all the questions that taxpayers may have.

In general, TEI believes Form 2119 is logical and relatively easy to follow. The instructions to the form, in combination with Publication 523, are generally complete and, with some minor exceptions, comprehensible. Indeed, the number one problem with the form is not its format or instructions; rather, it is that many taxpayers simply do not realize the form exists. Although the current instructions to the Form 1040 (Individual Income Tax Return) mention Form 2119 in the general description of "income," many individuals apparently remain unaware that sales of residences must be reported (even if the gain, if any, is being deferred). The Institute suggests that references to Form 2119 within Form 1040's line-by-line instructions be expanded. For example, the instructions for Line 13 of Form 1040 (Capital Gains and Losses) do not now mention the proper reporting for the sale of personal residences; a reference to Form 2119 could be added here. Another means of heightening awareness of the requirement may be to add a question to the Form 1040 asking, "Did you sell your principal residence this year? If so, file Form 2119."

With respect to the specific format of Form 2119, we offer the following comments. (For simplicity's sake, the line references are to the 1991 form.)

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