Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Probably. However, they might be able to sell a prorated exclusion to a sypathetic auditor who was in a good mood. Warning: what follows is pretty agressive.

The law says that a prorated exclusion applies if the move was due to a change in health, employment, or other unforeseen circumstances as prescribed by regulation. Since the IRS hasn't issued such regulations 4 years and counting after the law was enacted, I don't think it's totally unreasonable for people to start defining them for themselves.

Also, the law makes no connection between the home gain exclusion and the employment requirements for deductible moving expenses. Thus, if one of you spent a week as a Stepford Greeter at Wal-Mart in Florida, there you have a change in employment

They moved four years ago, and not (it would appear) to Florida. So it would be difficult to make a case that the sale was do to the move. But an equally aggressive but maybe quite reasonable approach might be to claim the 'children' were justing 'staying' with the folks and never did change their principal residence. So they would be entitled to a full exclusion.

Or sell the elderly parents place to the grandkids, and convert the childrens' house to a (real) rental. Or boot the grandkids ( who need to get real), do a couple of refis and wait for the inevitable.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.