YEARS LAND HELD BY GAINS, AS A PERCENTAGE

TRANSFEROR OF BASIS

200% or

0-99% 100-199% more

Less than one year 60% 70% 80%

At least one year, but less than 3 47.5% 55% 65%

At least 3 years, but less than 5 35% 40% 50%

At least 5 years, but less than 7 22.5% 25% 35%

At least 7 years, but less than 10 10% 15% 20%

2.__Exemption.__When an exemption from the penalty imposed under subsection 1 is provided in the case of a purchase of land for the use of a dwelling used by the taxpayer as that taxpayer's principal residence, the land need not have been purchased at the same time as the dwelling to qualify for that exemption.

§597.__Sale; exchange of land

A contract for the sale of land constitutes a sale or exchange of land for all purposes of this subchapter.__A contract does not constitute a sale or exchange until some consideration has passed to or for the benefit of the seller or exchanger.__The sale or exchange is considered to take place at the time any consideration first passes under the contract.__A mere promise to purchase and amounts paid as earnest money or amounts paid in deposit or amounts paid in escrow to which the seller has no immediate right do not constitute the passing of consideration for the purposes of this subchapter.

Any sale or exchange of shares in a corporation or other entity or of comparable rights or property interests in any other form of organization or legal entity that effectively entitles the purchaser to the use or occupancy of land constitutes a sale or exchange of land.

§598.__Dwelling on land for timber harvesting

If, at the time of transfer, there is not on the land for timber harvesting a dwelling completed and fit for occupancy as the purchaser's principal residence, the residence must be completed and occupied within 2 years of the date of transfer or the penalty imposed by this subchapter becomes due and payable.

§599.__Basis; gain; holding period