rp-98-20.pdf

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Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.602: Tax forms and instructions.
(Also Part I, Section 6045; 1.6045-4; section 121.)
Rev. Proc. 98-20
SECTION 1. PURPOSE
This revenue procedure sets forth the acceptable form of the
written assurances (certification) that a real estate reporting
person must obtain from the seller of a principal residence to
except such sale or exchange from the information reporting
requirements for real estate transactions under § 6045(e)(5) of
the Internal Revenue Code.
SECTION 2. BACKGROUND
.01 Section 6045(e) and § 1.6045-4 of the Income Tax
Regulations generally require a real estate reporting person (as
defined in § 6045(e)(2) and § 1.6045-4) to file an information
return regarding a real estate transaction and to furnish a payee
statement to the seller regarding that transaction. The
information return and statement must include the name, address,
and taxpayer identification number (TIN) of the seller, and the
gross proceeds of the real estate transaction. This information
is reported on Form 1099-S, Proceeds From Real Estate
Transactions.
.02 Section 312 of the Taxpayer Relief Act of 1997 (the
Act), Pub. L. No. 105-34, 111 Stat. 788 (August 5, 1997),

effective for sales or exchanges after May 6, 1997, amended
§ 6045(e) by adding a new paragraph (5), which excepts a sale or
exchange of a residence from the § 6045(e) information reporting
requirements if the seller provides the real estate reporting
person with a certification setting forth certain written
assurances, including an assurance that the residence is the
seller's principal residence (within the meaning of § 121) and an
assurance that the full amount of the gain on the sale or
exchange of the principal residence is excludable from gross
income under § 121.
.03 Section 312 of the Act also amended § 121 to provide new
rules for the exclusion of gain on certain sales or exchanges of
a principal residence. Section 121, as amended, provides that a
taxpayer may exclude from gross income up to $250,000 of gain on
the sale or exchange of a principal residence if certain
conditions are met. In certain circumstances, a married
individual filing a joint return for the taxable year of the sale
or exchange may exclude from gross income up to $500,000 of gain.
This exclusion also applies to the sale or exchange of stock held
by a tenant-stockholder in a cooperative housing corporation (as
defined in § 216) and may apply to the sale or exchange of a
remainder interest in a principal residence if the taxpayer so
elects.
SECTION 3. SCOPE
This revenue procedure applies to the information reporting
requirements under § 6045(e) for a sale or exchange of a
principal residence.

SECTION 4. SELLER CERTIFICATION
.01 To be excepted from the information reporting
requirements in § 6045(e) on the sale or exchange of a residence
(including stock in a cooperative housing corporation), the real
estate reporting person must obtain from the seller a written
certification, signed by the seller under penalties of perjury,
that assurances (1) through (4) set forth in section 4.02 of this
revenue procedure are true. For purposes of this certification,
the term "seller" includes each owner of the residence that is
sold or exchanged. Thus, if a residence has more than one owner,
a real estate reporting person must either obtain a certification
from each owner (whether married or not) or file an information
return and furnish a payee statement for any owner that does not
make the certification.
.02 The assurances are:
(1) The seller owned and used the residence as the
seller's principal residence for periods aggregating 2 years or
more during the 5-year period ending on the date of the sale or
exchange of the residence.
(2) The seller has not sold or exchanged another
principal residence during the 2-year period ending on the date
of the sale or exchange of the residence (not taking into account
any sale or exchange before May 7, 1997).
(3) No portion of the residence has been used for
business or rental purposes by the seller (or the seller's spouse
if the seller is married) after May 6, 1997.
(4) At least one of the following three statements

applies:
The sale or exchange is of the entire residence for
$250,000 or less.
OR
The seller is married, the sale or exchange is of the
entire residence for $500,000 or less, and the gain on the
sale or exchange of the entire residence is $250,000 or
less.
OR
The seller is married, the sale or exchange is of the
entire residence for $500,000 or less, and (a) the seller
intends to file a joint return for the year of the sale or
exchange, (b) the seller’s spouse also used the residence as
his or her principal residence for periods aggregating 2
years or more during the 5-year period ending on the date of
the sale or exchange of the residence, and (c) the seller’s
spouse also has not sold or exchanged another principal
residence during the 2-year period ending on the date of the
sale or exchange of the residence (not taking into account
any sale or exchange before May 7, 1997).
SECTION 5. FORMAT FOR MAKING SELLER CERTIFICATION
A sample certification form that may be used by a real
estate reporting person to obtain the applicable assurances from
the seller is provided in the Appendix of this revenue procedure.
However, use of this sample certification form is not required.
The requirements of the certification under § 6045(e)(5) will be

met if the content and wording of a written certification provide
the same information as required by section 4.02 of this revenue
procedure.
SECTION 6. OBTAINING AND RETAINING SELLER CERTIFICATION
.01 General rule. Except as provided in section 6.02 of
this revenue procedure, the real estate reporting person may
obtain a certification at any time on or before January 31 of the
year following the year of the sale or exchange of the residence.
The certification must be retained by the real estate reporting
person for 4 years after the year of the sale or exchange of the
residence to which the certification applies.
.02 Transition rule. For a sale or exchange of a residence
occurring after May 6, 1997 and on or before December 31, 1997,
the real estate reporting person may obtain a certification at
any time on or before February 28, 1998.
SECTION 7. PENALTIES
A real estate reporting person who relies on a certification
made in compliance with this revenue procedure will not be liable
for the penalties under § 6721 for failure to file an information
return, or under § 6722 for failure to furnish a payee statement
to the seller, unless the real estate reporting person has actual
knowledge that any assurance is incorrect.
SECTION 8. COMMENTS INVITED
The Service requests comments on any additional guidance
that may be needed under §§ 6045(e)(5) and 121. Comments should
be submitted by April 30, 1998, to: Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station, Washington, DC 20044, Attn:

CC:DOM:CORP:R (IT&A Branch 2), Room 5226. Submissions may be
hand-delivered between the hours of 8 a.m. and 5 p.m. to:
Courier’s Desk, Internal Revenue Service, 1111 Constitution
Avenue, NW, Washington, DC, Attn: CC:DOM:CORP:R (IT&A Branch 2),
Room 5226. Alternatively, taxpayers may submit comments
electronically at
http://www.irs.ustreas.gov/prod/tax regs/comments.html
(the Service’s internet site). All comments submitted will be
available for public inspection and copying.
SECTION 9. EFFECTIVE DATE
This revenue procedure is effective for sales or exchanges
of a residence occurring after May 6, 1997.
SECTION 10. PAPERWORK REDUCTION ACT
The collections of information contained in this revenue
procedure have been reviewed and approved by the Office of
Management and Budget in accordance with the Paperwork Reduction
Act (44 U.S.C. 3507) under control number 1545-1592.
An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection of information displays a valid OMB control number.
The collection of information in this revenue procedure is
in sections 4 and 5 of this revenue procedure. This information
is required to exempt a real estate reporting person from the
requirement to file an information return and furnish a payee
statement reporting the sale or exchange of a principal
residence. The likely respondents are individual taxpayers who
sell or exchange a principal residence and real estate

businesses.
The estimated total annual reporting burden for respondents
is 383,000 hours.
The estimated burden per respondent is 10 minutes. The
estimated number of respondents is 2,300,000. The frequency of
responses is on occasion.
The estimated total annual burden for recordkeepers is
37,500 hours.
The estimated annual burden per recordkeeper is 25 minutes.
The estimated number of recordkeepers is 90,000.
Books or records relating to a collection of information
must be retained as long as their contents may become material in
the administration of any internal revenue law. Generally, tax
returns and return information are confidential, as required by
26 U.S.C. 6103.

DRAFTING INFORMATION
The principal author of this revenue procedure is Sharon
Hester of the Office of Assistant Chief Counsel (Income Tax and
Accounting). For further information regarding this revenue
procedure, contact Ms. Hester at (202) 622-4920 (not a toll-free
call).

APPENDIX
CERTIFICATION FOR NO INFORMATION REPORTING
ON THE SALE OR EXCHANGE OF A PRINCIPAL RESIDENCE
This form may be completed by the seller of a principal
residence. This information is necessary to determine whether
the sale or exchange should be reported to the seller, and to the
Internal Revenue Service on Form 1099-S, Proceeds From Real
Estate Transactions. If the seller properly completes Parts I
and III, and makes a "yes" response to assurances (1) through (4)
in Part II, no information reporting to the seller or to the
Service will be required for that seller. The term "seller"
includes each owner of the residence that is sold or exchanged.
Thus, if a residence has more than one owner, a real estate
reporting person must either obtain a certification from each
owner (whether married or not) or file an information return and
furnish a payee statement for any owner that does not make the
certification.
Part I. Seller Information
1. Name
2. Address or legal description (including city, state, and ZIP
code) of residence being sold or exchanged

3. Taxpayer Identification Number (TIN)

Part II. Seller Assurances
Check "yes" or "no" for assurances (1) through (4).

Yes No
~~(1) I owned and used the residence as my principal
residence for periods aggregating 2 years or more
during the 5-year period ending on the date of the sale
or exchange of the residence.
~~(2) I have not sold or exchanged another principal
residence during the 2-year period ending on the date
of the sale or exchange of the residence (not taking
into account any sale or exchange before May 7, 1997).
~~(3) No portion of the residence has been used for
business or rental purposes by me (or my spouse if I am
married) after May 6, 1997.

~~(4) At least one of the following three statements
applies:
The sale or exchange is of the entire residence
for $250,000 or less.
OR
I am married, the sale or exchange is of the
entire residence for $500,000 or less, and the gain on
the sale or exchange of the entire residence is
$250,000 or less.
OR
I am married, the sale or exchange is of the
entire residence for $500,000 or less, and (a) I intend
to file a joint return for the year of the sale or
exchange, (b) my spouse also used the residence as his
or her principal residence for periods aggregating 2
years or more during the 5-year period ending on the
date of the sale or exchange of the residence, and (c)
my spouse also has not sold or exchanged another
principal residence during the 2-year period ending on
the date of the sale or exchange of the residence (not
taking into account any sale or exchange before May 7,
1997).
Part III. Seller Certification
Under penalties of perjury, I certify that all the above
information is true as of the end of the day of the sale or
exchange.

Signature of Seller Date