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B-197567 1 (1980-04-15)

handle is hein.gao/gaobadiei0001 and id is 1 raw text is: -- ~>. DECISION ' THE COIVIPTROLLER GENERAL OF THE UNITED STATES WASHINGTON, D.C. 20548 NITV3 FILE: B-197567// DATE: April 15, 1980 NAATTER PF: Robert A. McCrea - Relocation Expense- Tax on PQ deferred gain from Residence Sale DIGEST: Employee may not be reimbursed Oregon State income tax on deferred gain from sale of residence at old duty station. The tax was imposed only on a person selling Oregon residence and moving out of State, such as employee. The tax arose because of the em- ployee's gain in selling his home and was not based on the sales transaction itself. Neither 5 U.S.C. § 5724a(a)(4) nor Federal Travel Regulations authorize reimbursement of.income taxes arising from real estate transactions. J. C. Stengle, Authorized Certifying Officer, National Finance/KCP/V5 Center, Department of Agriculture, asks whether Mr. Robert A. Mc~rea, aF-7 est Service employee, may be reimbursed an Oregon State tax incurred after sale of his residence incident to change of his permanent duty station. O c7 Mr. McCrea sold his residence in Klamath Falls, Oregon, when he transferred from that permanent duty station to Bonners Ferry, Idaho, on May 23, 1978. Although the Federal income tax on the gain was postponed because he purchased a residence in Bonners Ferry for more than the sale price of the Klamath Falls residence, his 1978 Oregon State income tax was increased by $556.92 because of the gain from the sale. Mr. McCrea has submitted to us a State income tax instruction sheet explaining in item 25 that if an Oregon residence is sold and a new residence purchased outside the State, 50% of the deferred gain was taxable if the sale was before November 1, 1978, and 40% if the sale was after that date. The deferred gain was the same as that entered for Federal tax purposes on Internal Revenue Service Form 2119, line 13, entitled Gain on which tax is to be deferred. This entry in the amount of $13,311.69 reflects the net gain Mr. McCrea .accrued from buying and selling his Klamath Falls residence. The Oregon State tax was imposed on 50% of this amount, or $6,655.84, as indicated on line 25 of Mr. McCrea's 1978 State income tax return. To be reimbursable as a real estate expense authorized by 5 U.S.C. § 5724a(a)(4), the tax must be reasonably necessary to the flO7

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