Blank deed

According to the Tax Court, however, if the relocation company were acting as an agent, it was acting as an agent of the relocated employee with the power to complete the blank deed. According to the court, Amdahl was not interested in the home's long-term appreciation.

The primary factor relied on by the Amdahl court was the use of the "blank deed" by the relocation company.

Under the new standard, if the sale of the employee's residence to a third party, with the assistance of an employee-provided relocation company, is viewed as two separate sales, then no compensation is taxed to the employee, even if a blank deed is used.

Transferred employees are required to sign a blank deed that is not recorded.

This is in sharp contrast to Amdahl, where the Tax Court found that no sale took place between the employee and the employer because the employee retained legal title by using a blank deed. Could this mean that the IRS will argue, as it did in Amdahl, that the home, in the hands of the employer, is now a capital asset and that any future expenses or loss on the home's resale will not be ordinary in nature?

Employers and relocation management companies that use the ERC's 11 key elements and structure sales to conform to Situations 1 and 2 of Revenue Ruling 2005-74 should have no trouble treating the employee buyout as two separate sales, even if a blank deed is used.