The maximum amount of gain excludable from gross income under this section is one hundred twenty-five thousand dollars ($125,000.00). In the case of a separate return filed by a married taxpayer, the maximum amount allowable shall be sixty-two thousand five hundred dollars ($62,500.00) for such taxpayer.

The exclusion from gross income provided by this section can only be taken once by a taxpayer after reaching the age of fifty-five (55). After this election has been properly taken by a taxpayer, it shall not be available to the taxpayer again. However, refer to 1.26-51-305(c) regarding revocation of the election.

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.

With respect to excluding from gross income the gain realized from the sale or exchange of a home, both a husband and wife shall be treated as satisfying the age, holding and use requirements of 1.26-51-305(a) if all of the following requirements are met: