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I've asked this question in another forum and received conflicting answers. Maybe someone here can be a tie-breaker.

Situation: Over 65, sold principal residence, married and filing jointly, and need to know whether to declare sale proceeds.

The responses I received were:

"If the net gain was over $250k,($500K if married and filing jointly) the sale must be reported. If the sale is reportable, and there is a gain, you take the exemption in Sch D, col f (description is "Sec 121 Exclusion" (enter a negative number). The exclusion is the lesser of the gain or $250k($500K if married and filing jointly)."

"Yeah but... according to IRS Pub 523, unless there is a taxable gain on a sale of a principal residence the transaction should not be reported even if a 1099-S is received."


Which answer is correct?

~aj
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Situation: Over 65, sold principal residence, married and filing jointly, and need to know whether to declare sale proceeds.

The responses I received were:

"If the net gain was over $250k,($500K if married and filing jointly) the sale must be reported. If the sale is reportable, and there is a gain, you take the exemption in Sch D, col f (description is "Sec 121 Exclusion" (enter a negative number). The exclusion is the lesser of the gain or $250k($500K if married and filing jointly)."

Yeah but... according to IRS Pub 523, unless there is a taxable gain on a sale of a principal residence the transaction should not be reported even if a 1099-S is received."

Which answer is correct?
__________________________________________

I think they both are. If you read closely, they do not conflict, as I see it.

However, if I'm doing a return where a 1099-S WAS received, and the gain was not taxable, I would report the sale by showing the gross proceeds and a cost equal to that, for no gain.

Bill
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Which answer is correct?

They both are. I suggest you follow the 1040 instructions, which say not to report the sale if there's no taxable gain after the exclusion. I did this for 1999, and Uncle Sugar hasn't gotten his undies in a bunch yet.

Phil
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Thanks for the replies. My final decision was not to report. 1040 signed, sealed and mailed.

~aj
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