CCH Federal Taxation Basic Principles
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John has owned his principal residence for several years. On January 1, 20x1, he marries Tina. After one year of sharing a principal residence, the marriage turns sour, John moves into an apartment and they divorce. Pursuant to a divorce decree, John transfers ownership in the house to Tina on December 31, 20x1 and she immediately sells it at a $300,000 gain. Although she did not own the residence for two years, Tina can claim a $250,000 exclusion. She is deemed to have owned the house as her ex-spouse owned it, thus satisfying the two-out-of-five-year ownership requirement.
Sale of Home by Divorced or Separated Taxpayers— Ownership Requirement
Chapter 11, Exhibit 4b