Revenue Ruling 72-339 

Prepared by Worldwide ERC® Tax Counsel, Peter K. Scott
Peter Scott Associates
November 2000

A company, in order to assist an employee it transferred to a new work location agreed to purchase his home at fair market value.

The company selected three qualified and independent real estate appraisers to make separate appraisals of the home and the employee was offered the average of the three appraisals.

The company purchased the residence at the average appraised value resulting in a gain on the sale to the employee. None of the closing costs which under local law and custom were treated as being imposed on a seller were borne by the company, and no sales commissions were paid or incurred by either party in this transaction.

Held, the employee must account for the gain he realized on the sale of his residence, but no part of the transaction will give rise to income as compensation for the amount of a real estate commission that was neither paid nor incurred.

The foregoing is intended as general information only. Regarding your specific situation, Worldwide ERC® suggests that you consult with your own tax or legal advisor as appropriate.

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