CCH Federal Taxation Basic Principles
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Sale of Home by U.S. Citizens Temporarily Working Abroad
Code section 121(a) states that the two-out-of-five-year holding period requirement is satisfied if “property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.” Congress intended the word “used” to encompass something more than absentee-ownership. Until Congress provides specific relief to U.S. citizens working abroad, the term “used” should be construed to mean something akin to physical occupancy, not an extended absence while working abroad.
Chapter 11, Exhibit 9a