Monday, January 31, 2005
The IRS ruled in LTR 2005-04-012 (Oct. 14, 2004) (also available on the Tax Analysts web site as Doc 2005-1782, 2005 TNT 19-23) that an individual who lived in his primary residence for fewer than two years nevertheless could exclude the maximum allowable amount of gain from the sale of his home under § 121 based on these unforeseen circumstances:
TP completed a test in order to compete for a position within the K-9 unit of TP's police force. The K-9 unit represents only 3% of the entire police force and very few officers are selected to train for a position within the K-9 unit. After TP and Spouse started using the Townhouse as their principal residence, TP received notification that TP was selected to become a K-9 officer. According to TP's supplemental representations, a K-9 officer is required to care for a dog and maintain a 6 foot by 9 foot kennel at the officer's residence. The homeowners association for TP's townhouse does not permit its residents to maintain a kennel. Consequently, TP and Spouse sold the Townhouse before they had owned and used the property as their principal residence for 2 years.