Hello folks.

I have an appointment at my local IRS office regarding capital gains exclusion per Publication 523. The closest appointment is 30 days out. I am contacting this community to see if waiting for that appointment with the IRS is worth it!

The story is that hardship forced me to sell my primary residence in Aug 2022 after 16 months of ownership. The hardship was related to unforeseen Covid circumstances.
1. I lost my job in November 2021 due to corporate Covid policy,
2. I went into a forbearance program in June 2022 with the mortgage company,
3. maxed out 401K early contributions, and
4. drained my savings to meet basic living expenses.

Publication 523 lists some plausible exemptions on pages 6 and 7 (Unforeseeable Events) and (Other Facts and Circumstances). I meet the four bullet points listed on page 7:
• You sold your home not long after the situation arose. (8-months)
• You couldn’t have reasonably anticipated the situation when you bought the home.
• You began to experience significant financial difficulty maintaining the home.
• The home became significantly less suitable as a main home for you and your family for a specific reason.

I provided this information to my accountant, but they did not consider it my return. Thus, I have capital gains tax to pay IRS and my state (Georgia)! The accounting firm said to write a letter to the IRS and the state of Georgia with a plea! At this point, I’m assuming it might be outside their expertise, or they don’t want to deal with it. Frankly, I don’t see instructions in Publication 523 on how or what form to use for such an exemption. I hope the meeting with the IRS agent will provide some clarification/guidance.

Can this community share some thoughts on such hardship exemptions? Has anyone represented a client in this situation successfully? Your comments are greatly appreciated!