The exclusion of gain from the sale of a principal residence under IRC 5121: Whi

Question

The exclusion of gain from the sale of a principal residence under IRC 5121: While generally not available to trusts, is available to a grantor trust treated as wholly owned by a single grantor o B. Is available to any trust where the property is used as a principal residence by a beneficaryof ??. the trust. Can be used by a credit shelter trust so long as the surviving spouse of the original owner of the home resides in it. O C. D is available to trusts, though both two-year periods (the ownership and use periods) start over on the day the property is transferred to the trust.

Explanation / Answer

Answer :-

D. Is available to trusts, though both two - year periods( the ownership and owned periods) start over on the day the property is transferred to the trust.

Reason:

" Section 121 of IRC, Exclusion of gain from sale of principal residence,

(a) Exclussion:- Gross income shall not include gain from the sale or exchange of property, if during the five year period ending on the date of the sale or exchange, such property has been owned and used by the tax payer's principal residence for periods agreegating 2 years or more. "

Conditions for the above "D" option are satisfied:-

The property was owned by the trust before 2 years from the sale of property to the trust and at the same time, it is also being used by the trust by 2 years i.e from the date of its ownership.

It was owned and it was aslo used as the taxpayer's principal residence for a period of 2 years. So Conditions are satisfied with the "D" option given above

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