non-qualified use before 5-year period (principal residence gain exclusion)

Suppose a rental property becomes a principal residence, and is sold more than 5 years later.
IRC § 121(b)(5) seems to say that a portion of the gain must be allocated to the period of non-qualified use.
But in 2018 Publication 523, Worksheet 3 (p. 15), Section B says:
"Section B. Determine your non-qualified use gain. Complete this section only if there is a period, after the year 2008, when neither you nor your spouse (or your former spouse) used the property as a main home, and that period of non-use occurred during the 5-year period prior to the date of sale and before the time when you or your spouse (or your former spouse) used the property as a main home. Otherwise, skip to Section C."
Under this instruction, Section B is skipped, as the period of non-qualified use does not overlap the 5-year period. Skipping Section B makes all of the gain eligible for exclusion.
Is this an error in Publication 523? It seems like a botched expression of the exception in § 121(b)(5)(C)(ii)(I).
Cheers, Steve
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On Wednesday, October 9, 2019 at 4:14:10 PM UTC-7, Steve Kobes wrote:

I believe it is botched. It should have said "after" instead of "before" in "and before the time".
Maria U. Ku, CPA Oakland, CA
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On Wednesday, 16 October 2019 02:01:32 UTC-4, snipped-for-privacy@gmail.com wrote:

That doesn't seem right either. I think Pub. 523 Worksheet 3 Section B should say:
"Complete this section only if there is a period, after the year 2008, when neither you nor your spouse (or your former spouse) used the property as a main home, and that period of non-use occurred before the last time that you or your spouse (or your former spouse) used the property as a main home. Otherwise, skip to Section C."
Furthermore, Step 2 of the worksheet should be modified to explain that (even if Section B cannot be skipped) "non-use days" does not include days after the last day of principal residence use.
For example, if the taxpayer owns a rental property for 4 years, then makes it their main home for 3 years, then rents it out again for 2 years before selling it, only the first (4 year) period is non-qualified use for § 121.
I think there is no need for the worksheet to refer to the 5-year period at all. Admittedly, the statute's exclusion FROM non-qualified use is of days which are
- within the 5-year period AND - after the last day of principal residence use.
But if the latter is outside of the 5-year period, the taxpayer is disqualified from gain exclusion by the eligibility test (Pub 523 p. 3) and does not bother with Worksheet 3.
The worksheet as published (confining non-qualified use TO the 5-year period) is wrong regardless.
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I have seen some online *official* IRS changes to those instructions, which *might* be their "fix" for the (obvious?) problem. Or might not be...
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