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A while back I wrote about my sitaution regarding capital gains taxes and I thought I would let you know how it turned out for us.

First, the background...we were planning to sell our home after only 1yr.11mo. in order to move to a larger home for a "growing family". I had called the IRS and they said we would not have to pay taxes on our gain because it was so small. Many Fools responded, warning me that I should double-check the info as it was wrong and I would have to pay the taxes--28% of $38,000! OUCH!

After that I called the IRS again and talked to someone who specifically deals with capital gains questions. He could not give me a ruling but "wrote a letter" about my sitaution and told me to expect a response in about 10 days. Exactly 10 days later, we got the call back.

The IRS specifies 3 situations under which a seller could qualify for a "reduced maximum exculsion" (essentially prorating the amount of gain we could exclude):change in employment (as you may recall I am changing jobs but staying in the area); change in health; or other "unforseen circumstance". However, it turns out that no one in congress or the IRS has ever spelled out exactly what any of those conditions have to be. Therefore ANY change in employment (even one that does not qualify for a deduction of moving expenses) or circumstance that an individual claims is "unforseen" (including a pregnancy) has to be accepted as a good enough reason to take the reduced maximum
exclusion. We are getting this sent to us in writing.

Conclusion: We get to keep our close date as scheduled without having to pay an extra $10,000 in taxes! YEAH!
Thanks for all of your help!
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