Leaderboard

I'd only add that if the tenants are using a portion of the land for their livestock, I'd include that portion with the house on the rental expenses.

Yes, that's what I would do, Deb. I use the county property tax appraisal to allocate basis, property tax, and interest. For example, if 2/3 of the total appraisal is assigned to land, I'd allocate 2/3 of those three to land. I frequently have farmers wanting to write off all their property tax on Sch F. I think it's called the Whole Ball of Wax Method - House and All. I look up the county property tax data and allocate the appropriate fraction to farm use. I think it's as good a way as any most of the time.

I am assuming that the cancellation of debt took place prior to husband's passing so that would show up on his final 1040. Your proposed use of 982 seems to be that you are building a case that he was insolvent at the time. The fact that he owed $17,000 and only had $2,000 of asset should prove that. The community state issue is very important to this set of facts. MFS would probably be the best way to go (again, assuming lack of community property rules). Be sure you have your facts documented. It sounds like their was a stripping of assets out of the husband's name for some reason. Be sure there were no joint bank accounts or other money accounts that might end up queering the insolvency issue. Talk is cheap. Ask the administrator for a copy of the estate or inheritance tax return is one exists. Those are my rambling thoughts on this beautiful Friday morning!

Have you considered filing MFS to separate the husbamd's income and assets from the wife's? Are you in a community property state, which might complicate this tactic?