Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
Regulation 1997-4 - Comprehensive Individual Income Tax Regulations
Rule 26-51-305 - INCOME FROM SALE OF HOME
Rule 1.26-51-305(c) - One Time Exclusion of Gain from Gross Income - Example

An election to exclude from gross income the gain realized from the sale or exchange of a home may be made or revoked at any time before the period expires for filing a claim for credit or a refund of income tax paid for the tax year in which the sale or exchange occurred. If the taxpayer making the election or revocation is married, the taxpayer's spouse must join in the election or revocation.

For example, a taxpayer well above the age of fifty-five (55) sold his long-time principal place of residence in 1994. The taxpayer realized fifty-five thousand dollars ($55,000.00) in gain from the sale. In 1995, the taxpayer made his once-in-a-lifetime election to exclude the $55,000.00 of gain from his gross income. The taxpayer now wishes to revoke this election, as he anticipates realizing a larger gain on the pending sale of his current residence. Pursuant to ACA 26-18-306(i)(1), the taxpayer must file his revocation with the Department within three (3) years from the date his 1994 Arkansas income tax return was filed or two (2) years from the time his 1994 Arkansas income tax due was paid, whichever period expires later.