In this case, the petitioner sold his home and 80-acres of land on the installment basis for a gain of $657,796. The petitioner calculated the gain by excluding $500,000 of gain attributable to the home sale exclusion of I.R.C. Sec. 121. The buyers defaulted and the petitioner reacquired the property in full satisfaction of the debt. The IRS claimed the petitioner had to recognize gain upon repossession to the extent of money and other property received before repossession, which would, in essence, recapture the Sec. 121 exclusion previously claimed. The court agreed with IRS that the general rules of I.R.C. Sec. 1038 applied and noted that the petitioner was actually in a better position than before the sale because he had received some payments for the sale before the buyer's default and recouped the property. On appeal, the court affirmed. The court noted that there are two types of gain involved on reacquisition of real estate in accordance with I.R.C. Sec. 1038(b)(1) - gain "returned as income" on a prior return, and gain not yet "returned as income." Here, the court noted that the petitioner had reported $56,920 as income. The petitioner had not reported the $500,000 of gain attributable to the house, thus it was not "returned as income" on a prior return. Thus, by failing to resell the property within a year, the petitioner recognizes $505,000 received in cash, less the $56,920 already recognized as income. Debough v. Comr., 142 T.C. No. 17 (2014), aff'd.,No. 14-3036, 2015 U.S. App. LEXIS 15194 (8th Cir. Aug. 28, 2015).