Primary residence: 2 of 5 yrs rule fine, little documentation

[CompoundedInterest]

I am doing the taxes for my retired in-laws. They sold two houses in 2022, one small house they kept in the city near their medical providers as well as their substantially more expensive home on a trout river about 90 minutes away that they retired to in 2016.

They meet all the IRS guidelines outlined here https://www.irs.gov/publications/p523#e ... nk10008936 for claiming the trout river house as their primary residence, especially the requirement of living there at least 2 of the last 5 years.

However, due to their frequent trips back to the city for medical treatment and grandchildren over the years, they never changed the address on tax returns, driver's licenses, auto registrations, voter records, property taxes, etc. to the larger river house. All that mail continued to come to their second home in the city as that is where they lived while the larger home was being built, and as they aged and health declined, they made ever more frequent trips back to the small city home and never changed any of it.

Q: Claim the larger home as the primary, where they indeed spent more than 2 of the last 5 years, with little supporting proof, or claim the smaller home? The difference in capital gains taxes is substantial between the two.

Thanks in advance for your insight.

[toddthebod]

I am doing the taxes for my retired in-laws. They sold two houses in 2022, one small house they kept in the city near their medical providers as well as their substantially more expensive home on a trout river about 90 minutes away that they retired to in 2016.

They meet all the IRS guidelines outlined here https://www.irs.gov/publications/p523#e ... nk10008936 for claiming the trout river house as their primary residence, especially the requirement of living there at least 2 of the last 5 years.

However, due to their frequent trips back to the city for medical treatment and grandchildren over the years, they never changed the address on tax returns, driver's licenses, auto registrations, voter records, property taxes, etc. to the larger river house. All that mail continued to come to their second home in the city as that is where they lived while the larger home was being built, and as they aged and health declined, they made ever more frequent trips back to the small city home and never changed any of it.

Q: Claim the larger home as the primary, where they indeed spent more than 2 of the last 5 years, with little supporting proof, or claim the smaller home? The difference in capital gains taxes is substantial between the two.

Thanks in advance for your insight.

You only need to have lived there for 730 days in the last five years. I think it is unlikely you/they will have an issue requiring proof.

[MarkNYC]

They sold two houses in 2022, one small house they kept in the city near their medical providers as well as their substantially more expensive home on a trout river about 90 minutes away that they retired to in 2016.

They meet all the IRS guidelines outlined here https://www.irs.gov/publications/p523#e ... nk10008936 for claiming the trout river house as their primary residence, especially the requirement of living there at least 2 of the last 5 years.

However, due to their frequent trips back to the city for medical treatment and grandchildren over the years, they never changed the address on tax returns, driver's licenses, auto registrations, voter records, property taxes, etc. to the larger river house. All that mail continued to come to their second home in the city as that is where they lived while the larger home was being built, and as they aged and health declined, they made ever more frequent trips back to the small city home and never changed any of it.

Q: Claim the larger home as the primary, where they indeed spent more than 2 of the last 5 years, with little supporting proof, or claim the smaller home? The difference in capital gains taxes is substantial between the two.

The trout river house does NOT meet all of the IRS guidelines outlined for determining a primary residence. In fact, it seems to fail almost of the guidelines, specifically: Address Listed on Your-

1. U.S. Postal Service Address
2. Voter registration card
3. Federal and State tax returns
4. Driver's license or car registration

In addition: property tax records, and nearness to family members and doctors.

When a taxpayer owns more than one home, the more of the above that apply to a home the more likely it will be treated as a primary residence, and all of the above apply to the city home not the trout river lake home. The 2 out of 5 year rule applies ONLY if used as a primary residence.

So it seems that the taxpayers, for various reasons, never took any of the necessary actions to show a change of primary home from the city house to the trout river house. So I think claiming the principal residence exclusion on the sale of the trout river home would be difficult to sustain under audit.

[ZMonet]

Is there any documentation that would support the fact that they lived in the house as their primary residence for at least two out of five years? Could they get a declaration from a neighbor(s) to support that fact? Per the IRS website, "the most important factor is where you spend the most time" so the more evidence of where they spent the most time, the better.

[CompoundedInterest]

Is there any documentation that would support the fact that they lived in the house as their primary residence for at least two out of five years? Could they get a declaration from a neighbor(s) to support that fact? Per the IRS website, "the most important factor is where you spend the most time" so the more evidence of where they spent the most time, the better.

Yes, neighbors at both houses could confirm their occupancy. The wife keeps a desk calendar and has for years, marking when they would have to go back to the city. Fortunately, she doesn't throw them away. I asked her to go through them and total up what she's marked to see what total of days they definitively come up with.

I asked why they didn't change addresses on all the documents to make this a complete non-issue. "We're back there so regularly for doctor's appointments that we never bothered -- and almost everything is online anyway. "

[Raycpact]

Can you see your parents sitting down with an IRS agent and keep a straight face that they had 6 years to change their mail, registrations, insurance, voting cards etc. but just didn't get around to it?

[PotashDoggerd]

I am doing the taxes for my retired in-laws. They sold two houses in 2022, one small house they kept in the city near their medical providers as well as their substantially more expensive home on a trout river about 90 minutes away that they retired to in 2016.

They meet all the IRS guidelines outlined here https://www.irs.gov/publications/p523#e ... nk10008936 for claiming the trout river house as their primary residence, especially the requirement of living there at least 2 of the last 5 years.

However, due to their frequent trips back to the city for medical treatment and grandchildren over the years, they never changed the address on tax returns, driver's licenses, auto registrations, voter records, property taxes, etc. to the larger river house. All that mail continued to come to their second home in the city as that is where they lived while the larger home was being built, and as they aged and health declined, they made ever more frequent trips back to the small city home and never changed any of it.

Q: Claim the larger home as the primary, where they indeed spent more than 2 of the last 5 years, with little supporting proof, or claim the smaller home? The difference in capital gains taxes is substantial between the two.

Thanks in advance for your insight.

In this case, although your wish to assist your in-laws with their taxes is more than admirable, you should advise them to go to a qualified tax accountant or CPA (not an outfit like H&R Block, which is too cookie cutter), who will be able to properly assist them with correctly filing their tax return(s), and specifically, to the extent documentation is required or strongly preferred to document their claims about where they were and were not living, to assist them with identifying and gathering those documents, in the event of audit risk.

The other problem with this situation is that if they failed to ever update things like driver's licenses, auto registrations, etc., they might be exposing themselves to potential legal liability depending on the laws of the state they live in. Many states require that vehicles be registered where they are actually garaged an many states also require driver's licenses to reflect the driver's true address.

It sounds like all of your in-laws' "personal paperwork" directly contradicts their attempt to claim the exclusion in this situation. That may or may not be dispositive.

Another concern I would have is that your in laws may have had some specific reason to NOT change their official documents to reflect their true permanent residence all these years, i.e., to retain eligibility for some form of government benefit, or perhaps one or both of them worked for a government agency which had a residency requirement.

It kind of sounds like your in-laws haven't told you everything you need to know to fully and properly assist them with these tax returns.

Time to give them the best advice possible in this situation, which is: direct them to a qualified tax professional to have their questions answered and their returns filed and prepared.

Don't try to be a "hero" just because the inlaws want to try to save a few hundred dollars.

[PotashDoggerd]

I am doing the taxes for my retired in-laws. They sold two houses in 2022, one small house they kept in the city near their medical providers as well as their substantially more expensive home on a trout river about 90 minutes away that they retired to in 2016.

They meet all the IRS guidelines outlined here https://www.irs.gov/publications/p523#e ... nk10008936 for claiming the trout river house as their primary residence, especially the requirement of living there at least 2 of the last 5 years.

However, due to their frequent trips back to the city for medical treatment and grandchildren over the years, they never changed the address on tax returns, driver's licenses, auto registrations, voter records, property taxes, etc. to the larger river house. All that mail continued to come to their second home in the city as that is where they lived while the larger home was being built, and as they aged and health declined, they made ever more frequent trips back to the small city home and never changed any of it.

Q: Claim the larger home as the primary, where they indeed spent more than 2 of the last 5 years, with little supporting proof, or claim the smaller home? The difference in capital gains taxes is substantial between the two.

Thanks in advance for your insight.

You only need to have lived there for 730 days in the last five years. I think it is unlikely you/they will have an issue requiring proof.

This appears incorrect. The home must be the taxpayer's "principal residence."

[toddthebod]

I am doing the taxes for my retired in-laws. They sold two houses in 2022, one small house they kept in the city near their medical providers as well as their substantially more expensive home on a trout river about 90 minutes away that they retired to in 2016.

They meet all the IRS guidelines outlined here https://www.irs.gov/publications/p523#e ... nk10008936 for claiming the trout river house as their primary residence, especially the requirement of living there at least 2 of the last 5 years.

However, due to their frequent trips back to the city for medical treatment and grandchildren over the years, they never changed the address on tax returns, driver's licenses, auto registrations, voter records, property taxes, etc. to the larger river house. All that mail continued to come to their second home in the city as that is where they lived while the larger home was being built, and as they aged and health declined, they made ever more frequent trips back to the small city home and never changed any of it.

Q: Claim the larger home as the primary, where they indeed spent more than 2 of the last 5 years, with little supporting proof, or claim the smaller home? The difference in capital gains taxes is substantial between the two.

Thanks in advance for your insight.

You only need to have lived there for 730 days in the last five years. I think it is unlikely you/they will have an issue requiring proof.

This appears incorrect. The home must be the taxpayer's "principal residence."

I saw MarkNYC's post. I agree it poses a problem that they didn't change their addresses on anything. But those are not cut & dry requirements. So the question remains whether they can defend calling it their principal residence. If they spent 300 days of the year there, for example, only coming into the city for a few days every couple weeks to go to the doctor and collect their mail, I think they could defend that.

[CompoundedInterest]

I'm thinking the same -- just hand it over to a pro.

There are no benefits they are hanging onto, no government agencies they worked for, etc. to otherwise entice them to not change their addresses. The addresses on all the key documents where we likely will have to end up calling their primary is just a very small townhome just big enough to spend the night in every once in a while. There's virtually no storage there as well, why they weren't there but visiting the doctors. They both retired and immediately went into one medical situation after another (cancer, ongoing chemotherapy, major surgeries, etc.) and just kept a steady path back from the retirement home to town. Originally the plan was to sell the small townhome after the large retirement home was built, but the illnesses kicked in and they never did. The illnesses likewise progressed and are the core reason for selling them both in 2022. However, I fully see that the IRS very likely won't see it that way. I'll just suggest leaving the little house as primary to have no worries -- or -- if they want to do the other, talk to a professional. If it was just a few hundred dollars, this would be a no-brainer, but the tax difference is tens of thousands.

[PotashDoggerd]

Is there any documentation that would support the fact that they lived in the house as their primary residence for at least two out of five years? Could they get a declaration from a neighbor(s) to support that fact? Per the IRS website, "the most important factor is where you spend the most time" so the more evidence of where they spent the most time, the better.

Yes, neighbors at both houses could confirm their occupancy. The wife keeps a desk calendar and has for years, marking when they would have to go back to the city. Fortunately, she doesn't throw them away. I asked her to go through them and total up what she's marked to see what total of days they definitively come up with.

I asked why they didn't change addresses on all the documents to make this a complete non-issue. "We're back there so regularly for doctor's appointments that we never bothered -- and almost everything is online anyway. "

Be careful. I don't think it's safe to make any assumptions about what your in laws' neighbors would be willing to do to "confirm their occupancy" i.e. such as providing sworn affidavits under penalties of perjury to the IRS if called upon to do so. Even the most friendly neighbors would hesitate before sticking their necks out like that. Besides, did your in-laws neighbors keep contemporaneous calendars or diaries documenting each and every day over the past 5 years that they not only saw your in laws visiting during the daytime at the trout house, but can confirm through personal observation that your in laws stayed overnight? That's just highly unlikely.

I think before you put any more personal effort into this project aside from telling them they should consult a tax professional to handle this, you need to ask them to give you a candid explanation of why they didn't have any of their personal paperwork changed in all of this time to reflect what they are now trying to claim for tax purposes, was the reality of their living situation. "Not getting around to it" simply isn't a good enough answer for you to be comfortable in taking on this kind of an obligation.

If they file these returns with your assistance, even if you don't sign them as their tax preparer, and the IRS later audits them (however unlikely that might be), the neighbors decide they don't wish to back up your in laws, what are the odds your in laws will then point the finger at you? "Our son in law helped us with the return, he said it would be O.K.! We trusted him!!!![etc.]"

[PotashDoggerd]

Can you see your parents sitting down with an IRS agent and keep a straight face that they had 6 years to change their mail, registrations, insurance, voting cards etc. but just didn't get around to it?

LOL go directly to jail, do not pass go, do not collect $500,000 primary residence exclusion

[PotashDoggerd]

I am doing the taxes for my retired in-laws. They sold two houses in 2022, one small house they kept in the city near their medical providers as well as their substantially more expensive home on a trout river about 90 minutes away that they retired to in 2016.

They meet all the IRS guidelines outlined here https://www.irs.gov/publications/p523#e ... nk10008936 for claiming the trout river house as their primary residence, especially the requirement of living there at least 2 of the last 5 years.

However, due to their frequent trips back to the city for medical treatment and grandchildren over the years, they never changed the address on tax returns, driver's licenses, auto registrations, voter records, property taxes, etc. to the larger river house. All that mail continued to come to their second home in the city as that is where they lived while the larger home was being built, and as they aged and health declined, they made ever more frequent trips back to the small city home and never changed any of it.

Q: Claim the larger home as the primary, where they indeed spent more than 2 of the last 5 years, with little supporting proof, or claim the smaller home? The difference in capital gains taxes is substantial between the two.

Thanks in advance for your insight.

You only need to have lived there for 730 days in the last five years. I think it is unlikely you/they will have an issue requiring proof.

This appears incorrect. The home must be the taxpayer's "principal residence."

I saw MarkNYC's post. I agree it poses a problem that they didn't change their addresses on anything. But those are not cut & dry requirements. So the question remains whether they can defend calling it their principal residence. If they spent 300 days of the year there, for example, only coming into the city for a few days every couple weeks to go to the doctor and collect their mail, I think they could defend that.

Let's put it this way: Say you're an IRS auditor or basically anyone who isn't related to the OP's in-laws.

You've got to make your decision about whether the deduction is proper based on whatever the "record" is in front of you, i.e. let's say it's a mail in audit or an in-office audit at the IRS. They will ask you to bring in all your supporting documentation in support of the deduction, right?

So all the personal documentation of both in-laws/taxpayers completely contradicts their deduction claim. So there is likely going to be a pretty strong presumption that the deduction should be disallowed. Since many states require driver's licenses and vehicle registrations to be changed to reflect the actual location where the vehicles are normally parked or garaged, or where the principle residence actually is, the IRS agent could simply look at all the personal documentation, make the presumption that the taxpayers followed the laws of their state, and that the vehicles registrations and drivers licenses are correct and accurate. There is absolutely no reason for an IRS agent to assume that the taxpayers violated various state laws re: their drivers licenses and vehicle registrations. Not for 6 years.

The neighbors of the trout house, even if they can be located, even if they are willing to provide sworn notarized affidavits, probably won't be able to provide enough specific and detailed information to conclusively contradict your in laws paperwork. I mean, who really, keeps that close an eye on their neighbors for five years? Not to mention the neighbors won't have kept any contemporaneous records of their observations.

So all the IRS auditor is probably going to do is simply look at the personal documents, any other documentation the in laws care to provide (probably in this case there is no other documentation that would help them), and assess a deficiency possibly with interest and penalties. Then if OPs in laws object to that outcome, they can go through IRS internal appeals process or take it to tax court.

But, if things REALLY go south during an unfavorable IRS audit, they could also be charged negligence or even civil fraud penalties depending upon the amount of the deficiency.

So there is a lot of potential downside here for your in laws and anyone who tries to help them and isn't an expert at it.

Which is not to say they should NOT take the deduction, IF they are entitled to it.

[PotashDoggerd]

I'm thinking the same -- just hand it over to a pro.

There are no benefits they are hanging onto, no government agencies they worked for, etc. to otherwise entice them to not change their addresses. The addresses on all the key documents where we likely will have to end up calling their primary is just a very small townhome just big enough to spend the night in every once in a while. There's virtually no storage there as well, why they weren't there but visiting the doctors. They both retired and immediately went into one medical situation after another (cancer, ongoing chemotherapy, major surgeries, etc.) and just kept a steady path back from the retirement home to town. Originally the plan was to sell the small townhome after the large retirement home was built, but the illnesses kicked in and they never did. The illnesses likewise progressed and are the core reason for selling them both in 2022. However, I fully see that the IRS very likely won't see it that way. I'll just suggest leaving the little house as primary to have no worries -- or -- if they want to do the other, talk to a professional. If it was just a few hundred dollars, this would be a no-brainer, but the tax difference is tens of thousands.

With all those medical issues and "forgetting" to change any of their personal documents for six years, is there possibly an issue of cognitive impairment which may need to be addressed?

Where did your inlaws get the idea that they were entitled to the capital gains exclusion on the trout house in the first place? Was it their idea or yours? Them having enough on the ball to suggest this doesn't seem consistent with just forgetting to update important personal documents for 6 years.

Wow you really grabbed a tiger by the tail here, didn't you. Good luck.

[CompoundedInterest]

There are no benefits they are hanging onto, no government agencies they worked for, etc. to otherwise entice them to not change their addresses. The addresses on all the key documents where we likely will have to end up calling their primary is just a very small townhome just big enough to spend the night in every once in a while. There's virtually no storage there as well, why they weren't there but visiting the doctors. They both retired and immediately went into one medical situation after another (cancer, ongoing chemotherapy, major surgeries, etc.) and just kept a steady path back from the retirement home to town. Originally the plan was to sell the small townhome after the large retirement home was built, but the illnesses kicked in and they never did. The illnesses likewise progressed and are the core reason for selling them both in 2022. However, I fully see that the IRS very likely won't see it that way. I'll just suggest leaving the little house as primary to have no worries -- or -- if they want to do the other, talk to a professional. If it was just a few hundred dollars, this would be a no-brainer, but the tax difference is tens of thousands.

With all those medical issues and "forgetting" to change any of their personal documents for six years, is there possibly an issue of cognitive impairment which may need to be addressed?

Where did your inlaws get the idea that they were entitled to the capital gains exclusion on the trout house in the first place? Was it their idea or yours? Them having enough on the ball to suggest this doesn't seem consistent with just forgetting to update important personal documents for 6 years.

Wow you really grabbed a tiger by the tail here, didn't you. Good luck.

It's not like that. They have no idea. I was just helping them out and, of course, was going to use what we all call as "their house" as the primary, because it was. It's only when I started to notice all their 1099s and the like had the townhouse address on them did I start asking and realize they just left 100% of all the key documents unchanged. This is unfortunately consistent with other aspects of their life. e.g. I dug into their retirement accounts with their financial advisor, whom they haven't met with in years, after they mentioned "one of our accounts have run dry" not that far into retirement. ??? I find very expensive ERs on funds plus outsized management fees on top of that, mated with the underlying investments doing poorly both in good times and bad, and their advisor not saying a word as their withdrawal rate was very high. He only spoke up when there was nothing more to take out of her account and her monthly checking deposit didn't show up. When I asked them about the same, they said "we just leave it all to [name]". Other aspects of their life is the same -- financing purchases while having cash in the bank drawing nothing, etc.... Therefore, I wasn't too surprised to come across the primary residence problem, costing them tens of thousands in extra tax, once I got to working through the return.... It unfortunately is par for the course and this will be one more item to add to the list of needless money wasted.

[knightrider]

Claim the larger home since that is their true primary residence. Forget about "documentation". I've never heard of the IRS auditing these things. In the 1 in a million chance they do it will be very clear they are being honest and the audit will end.

[PotashDoggerd]

Claim the larger home since that is their true primary residence. Forget about "documentation". I've never heard of the IRS auditing these things. In the 1 in a million chance they do it will be very clear they are being honest and the audit will end.

It may not manifest as what most people commonly think of as an "audit," where an agent actually visits your home or business, or you are called in for an in-office audit at the IRS.

It could simply be a letter from the IRS disallowing the deduction and assessing a deficiency against the homeowners, without much if any explanation beyond that.

This could be triggered by any of a number of random red flags which might cause an IRS computer to tag the return and have an actual human being examine it for discrepancies.

For example, what principal address have the homeowners been using on their prior years tax returns for the past six years? Does it at least match the trout house address? What about on other things like bank accounts, brokerage accounts, and so forth? It kind of sounds like everything is going to point towards the other house, not the trout house, as being the default "principal residence" for IRS purposes.

On the issue of whether or not a taxpayer should take a deduction if and only if they are clearly entitled to it, or at least can establish a good faith argument with necessary proofs if called upon to do so--as opposed to simply taking the risk that an audit will or won't occur--the taxpayer's obligation is to comply with the tax law, regardless of whether the taxpayer, rightly or wrongly, hopes they will never be audited.

[PotashDoggerd]

There are no benefits they are hanging onto, no government agencies they worked for, etc. to otherwise entice them to not change their addresses. The addresses on all the key documents where we likely will have to end up calling their primary is just a very small townhome just big enough to spend the night in every once in a while. There's virtually no storage there as well, why they weren't there but visiting the doctors. They both retired and immediately went into one medical situation after another (cancer, ongoing chemotherapy, major surgeries, etc.) and just kept a steady path back from the retirement home to town. Originally the plan was to sell the small townhome after the large retirement home was built, but the illnesses kicked in and they never did. The illnesses likewise progressed and are the core reason for selling them both in 2022. However, I fully see that the IRS very likely won't see it that way. I'll just suggest leaving the little house as primary to have no worries -- or -- if they want to do the other, talk to a professional. If it was just a few hundred dollars, this would be a no-brainer, but the tax difference is tens of thousands.

With all those medical issues and "forgetting" to change any of their personal documents for six years, is there possibly an issue of cognitive impairment which may need to be addressed?

Where did your inlaws get the idea that they were entitled to the capital gains exclusion on the trout house in the first place? Was it their idea or yours? Them having enough on the ball to suggest this doesn't seem consistent with just forgetting to update important personal documents for 6 years.

Wow you really grabbed a tiger by the tail here, didn't you. Good luck.

It's not like that. They have no idea. I was just helping them out and, of course, was going to use what we all call as "their house" as the primary, because it was. It's only when I started to notice all their 1099s and the like had the townhouse address on them did I start asking and realize they just left 100% of all the key documents unchanged. This is unfortunately consistent with other aspects of their life. e.g. I dug into their retirement accounts with their financial advisor, whom they haven't met with in years, after they mentioned "one of our accounts have run dry" not that far into retirement. ??? I find very expensive ERs on funds plus outsized management fees on top of that, mated with the underlying investments doing poorly both in good times and bad, and their advisor not saying a word as their withdrawal rate was very high. He only spoke up when there was nothing more to take out of her account and her monthly checking deposit didn't show up. When I asked them about the same, they said "we just leave it all to [name]". Other aspects of their life is the same -- financing purchases while having cash in the bank drawing nothing, etc.... Therefore, I wasn't too surprised to come across the primary residence problem, costing them tens of thousands in extra tax, once I got to working through the return.... It unfortunately is par for the course and this will be one more item to add to the list of needless money wasted.

[barnaclebob]

Personally based on what you have said, id claim the bigger house as the primary save as much documentation as you can and if the IRS says anything let a tax pro handle it from there.

[Katietsu]

In reality, lots of people do not change their address, right or wrong, in this kind of situation. I concur that they may have a problem proving the trout river house as their primary residence. But choosing not to update paperwork is not the key factor in what your primary residence actually is.

For the many suggesting the trout river home is not a primary residence during those earlier years of moving out there, then what was the primary residence. Assume that they stayed at rrout River house over 325 days a year for 4 years and planned to stay there permanently. The townhouse is not a primary residence if they view it as a secondary location, stay there just a couple times a month and have few of their belongings bags there. So would you be saying they had no primary residence?

Does their state have a homestead benefit such as lower property tax on a primary residence, be it for all residents or for elderly residents? Anything else like this where primary residence is a factor? What did the tell the home owners insurance about which property was being used full time and which property was mostly vacant? What about the primary place the car was garaged?

On the other hand, they may have done some questionable things like vote in the wrong jurisdiction. So it may get complicated.

The IRS used to have an example in one of their publications over a decade ago that this made me think about. A woman had a home in location 1 that she owned. She took a job in location 2. She rented an apartment in location 2 and spent M-F there returning to her original home on weekends. She did not change her mailing address with businesses or her driver’s license. She attended church in location 1. I do not remember all the details in the example. However, the IRS made the point that location 2 was her primary residence as that was where she spent a majority of her time.

[MP123]

If the situation was reversed, and the city house had the greater excludable gain it would not be correct to treat it as the primary simply because of the documenation if the trout house was really their primary residence based on time spent there.

I do think they might have an uphill battle if questioned, but I'm not sure that means they should report a primary residence that was not, in fact, their primary residence.

[twh]

is is possible to access some credit card statements from the parents for the last few years? If there are plenty of charges near the trout house, that could be enough proof I would think.

The thing about the "non-primary" house having your mail delivered there is less of an issues if your other house is only 90 minutes away.

[123]

What address did they use for the property tax statements, property insurance billings, and utility billing for the trout river property? If they used the city address for those it could require extraordinary effort to overcome.

[Nate79]

I would follow MarkNYC's advice or get a tax pro. Tax fraud is no joke.

[twh]

I would follow MarkNYC's advice or get a tax pro. Tax fraud is no joke.

The bar for tax fraud is high. Having the IRS not agree with your interpretation when you have valid evidence and arguments is not the same as tax fraud. IANAL, and I'm not suggesting one course of action or another. But, IMO, if you have a valid and defensible position, it should be considered.