Delivery: Text Based
Credit Hours: 3
Field of Study: Federal Tax Update
Approval: IRS, CTEC
Upon successful completion of this basic level (refresher) course, including passing the 15-Question Final
Exam with a score of 70% or higher, you will receive three (3) Continuing Education credits.
This course addresses the tax treatment of the ownership and sale of a taxpayer's primary personal
residence, the principles of which are found in IRC Section 121, known as the "Section 121 exclusion."
IRC Section 121 has its roots in the Revenue Act of 1951 (P.L. 183, 82d Cong.) As originally enacted, the
relevant sections of the 1951 act generally provided for the deferral of gain recognized on the sale of a
principal residence if a taxpayer purchased a replacement residence of equal or greater value. IRC
Section 121 is a tax provision originally intended to simplify the tax consequences of selling a home.
In 1997, under the #mTaxpayer Relief Act (TRA) of 1997#m (Pub. Law 105-34), the amount of gain a
taxpayer could exclude from gross income on the sale of a personal residence was substantially
increased. Some would argue that such a generous exclusion became an incredibly valuable tool in
home speculation and thereby played a role in the escalation of the real estate boom and then its
subsequent bust in 2009.
This course presents the application of those increased Section 121 provisions so that you will be able
- Identify the correct treatment of vacant land
- Identify what costs increase or decrease the basis of a home
- Identify relevant factors for a reduced maximum exclusion
- Identify what is included in the selling price of a main home
- Identify when a federal mortgage subsidy must be recaptured
- Identify the special rules that apply for members of the uniformed services
- Determine how to figure dispositions (other than sales) of a main home
- Figure a taxable gain on the sale of a main home and identify where to report it
- Figure a surviving spouse's basis in a jointly owned home
- Figure the deduction for real estate taxes when a home is sold