II 110th CONGRESS 1st Session S. 138 IN THE SENATE OF THE UNITED STATES January 4, 2007 Mr. Schumer introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to apply the joint return limitation for capital gains exclusion to certain post-marriage sales of principal residences by surviving spouses.

1.

Application of joint return limitation for capital gains exclusion to certain post-marriage sales of principal residences by surviving spouses

(a)

Sale within 2 years of spouse's death

Section 121(b) of the Internal Revenue Code of 1986 (relating to limitations) is amended by adding at the end the following new paragraph: (4)

Special rule for certain sales by surviving spouses

In the case of a sale or exchange of property by an unmarried individual whose spouse is deceased on the date of such sale, paragraph (1) shall be applied by substituting $500,000 for $250,000 if such sale occurs not later than 2 years after the date of death of such spouse and the requirements of paragraph (2)(A) were met immediately before such date of death. . (b)

Effective date

The amendment made by this section shall apply to sales or exchanges after December 31, 2006.