CCH Federal Taxation Basic Principles
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Sale of Home by Incapacitated Taxpayers
If an individual becomes physically or mentally incapable of self-care, the individual is deemed to use a residence as a principal residence during the time in which the individual owns the residence and resides in a licensed care facility (e.g., a nursing home). In order for this rule to apply, the taxpayer must have owned and used the residence as a principal residence for an aggregate period of at least one year during the five years preceding the sale or exchange.
Chapter 11, Exhibit 8a