July 21, 1983

You inquire whether Massachusetts will extend the two year period within which you must purchase a new residence in order to postpone recognition of the gain realized from the sale of your former principal residence. You sold your home on August 27, 1982. Title to the house was in your name. As a result of a court order, the proceeds from the sale of your house are being held in escrow pending a hearing to determine a property settlement with your former husband.

On the date you sold your home, Massachusetts gross income was federal gross income as defined in the Internal Revenue Code as amended on November 6, 1978. (G.L. c. 62, §§ 1(c), 2(a)). Under Section 1034(a) of that Code, you had a period beginning 18 months before the date of sale and ending 18 months after the date of sale to purchase a new residence and avoid recognition of gain from the sale.

For taxable years beginning on or after January 1, 1983, Massachusetts gross income is federal gross income as defined under the Internal Revenue Code as amended on February 1, 1983, with modifications not relevant here. (G.L. c. 62, §§ 1(c), 2(a), as amended by St. 1983, c. 233, § 11). Under that Code, the former 18 month period has been extended to two years. (Code Section 1034(a)).

On January 1, 1983, the 18 month period following the date you sold your home was still running. The two year period is now applicable.

The two year replacement period cannot be extended unless the property is compulsorily or involuntarily converted, or unless the taxpayer is a member of the United States armed forces serving on extended active duty, or unless the taxpayer has a "tax home" outside the United States following the sale of the former residence. (I.R.C. §§ 1033, 1034(h), (k)).

Based upon the foregoing, it is ruled that the gain, if any, which you realized on the sale of your former principal residence will be recognized for Massachusetts income tax purposes in the same taxable year and in the same amount as that gain is recognized for federal income tax purposes.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson

Commissioner of Revenue

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LR 83-57