Armed Forces Tax Fairness Act of 2002

Armed Forces Tax Fairness Act of 2002 - Amends the Internal Revenue Code (the Code) to suspend, for members of the uniformed services or of the Foreign Service serving on "qualified official extended duty" (any extended duty while serving at a duty station which is at least 150 miles from the principal residence or while residing under Government orders in Government quarters), the five-year period utilized in determining exclusion of gain from the sale of such residence. Limits the extension of such period to not more than five years.

Restores in full the tax-exempt status of death gratuity payments to members of the armed services.

Excludes from gross income any fringe benefit qualifying as a "qualified military base realignment and closure fringe."

Expands the applicability of rules concerning time for the performance of certain acts under the Code (filing, payment, and etc.) which may be postponed because of service in a combat zone to include service away from a service member's permanent duty station while participating in an operation designated by the Secretary of Defense as a contingency operation.

Permits ancestors and lineal descendants of past or present members of the armed forces to be taken into account in determining whether a veterans' organization is exempt from tax.

Includes dependent care assistance within the definition of a qualified military benefit which shall be excluded from gross income, thus excluding such assistance from gross income for uniformed service members and former members.