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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121338  
Subject: Re: Rental conversion to primary residence Date: 1/31/2000 5:13 PM
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<<Sale,and proration, due to "unforeseen circumstances", evidently are allowed. Can someone help me as to the reality of prorating or,what are "unforeseen circumstances" ? >>

In his response, Phil indicates that the exceptions are due to health and job issue. Period.

I don't think that I necessarily agree that health and job issues are the ONLY exceptions. As was pointed out, "unforseen circumstances" enter into the mix.

The code says so...as follows "such sale or exchange is by reason of a change in place of employment, health, or, to the extent provided in regulations, unforeseen circumstances."

It would seem logical to go to the regulations to find out what Uncle Sammy means by "unforseen circumstances". Problem is that the regs don't identiry any "unforseen circumstances" per se...cause none have been written yet.

So the next best area of guidance is the IRS Publications. If you read that publication, there is NO REFERENCE to "unforeseen circumstances". So if you go directly by the Pub, Phil's original statement would be correct.

I would like to go by the code...but since there are no regulations written, we have no definition of "unforseen" circumstances.

Is it a problem? Sure. We don't know what might constitute such circumstances. Divorce? Possibly. Damage or destruction from fire or flood? Possibly. Tired of the color of the carpet? Certainly not. So it's an interpretation issue...where the tax pro (or individual) has to make some judgement calls. I would LOVE to know what, if anything, would be considered unforeseen circumstances. But until the regulations are issued, all we can do is the best we can do.

I've discussed this issue in the folder in prior posts. You might want to do a folder search for additional information. Or you can read more about this in the Taxes FAQ area.

TMF Taxes
Roy
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