PRINCIPAL RESIDENCE CAPITAL GAINS EXCLUSION.

SEC. 6011. PRINCIPAL RESIDENCE CAPITAL GAINS EXCLUSION. (a) In General.—Subsection (d) of section 121 of the Internal Revenue Code of 1986 (relating to one-time exclusion of gain from sale of principal residence by individual who has attained age 55) is amended by adding at the end thereof the following new paragraph: “(9) Determination of use during periods of out-of-residence care.— In the case of a taxpayer who— “(A) becomes physically or mentally incapable of self-care, and “(B) owns property and uses such property as the taxpayer’s principal residence during the 5-year period described in subsection (a)(2) for periods aggregating at least 1 year, then the taxpayer shall be treated as using such property as the taxpayer’s principal residence during any time during such 5-year period in which the taxpayer owns the property and resides in any facility (including a nursing home) licensed by a State or political subdivision to care for an individual in the taxpayer’s condition.” (b) Effective Date.—The amendment made by subsection (a) shall apply with respect to any sale or exchange after September 30, 1988, in taxable years ending after such date.