If an individual taxpayer sold or exchanged a personal residence between July 27, 1978 and December 31, 1978, and is claiming the $100,000 exclusion for all or part of the capital gain derived from such sale or exchanged for federal income tax purposes, said exclusion does not apply in computing Massachusetts capital gain. This exclusion was enacted as part of the Federal Revenue Act of 1978 and its provisions do not apply for Massachusetts income tax purposes. The taxpayer may be entitled to the $35,000 sales price exclusion based upon the provisions of the prior Federal law which continue to be applicable.

In order to compute the proper Massachusetts gain upon the sale or exchange of a personal residence between July 27 and December 31, 1978, a taxpayer should complete Massachusetts Form M-2119. This form, together with a copy of the Federal Form 2119, should be attached to the 1978 Massachusetts Form 1 to substantiate any exclusion that is taken.


/s/ Daniel B. Breen
Commissioner of Revenue


January 31, 1979



TIR 79-2