rbynaker
Level 13
03-12-2021
07:52 PM
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The authority is actually in the Regs. See 1.121-1(b)(3)(ii)(C):
https://www.law.cornell.edu/cfr/text/26/1.121-1
Assuming the combined gain is not over the limit, I would report the land sale and exclude the gain on the original 2020 tax return. I would also attach a preparer note referencing the regulation above and indicate how much of the exclusion amount will be allocated to the 2021 sale.
Probably overkill, but I really love answering IRS inquiries with "as stated in the note attached to the tax return . . . <copy><paste>"
Rick