ILLMAS Posted April 5, 2012 Report Share Posted April 5, 2012 TP went through bankruptcy, TP had a 2 unit house, TP lived in one apartment (sale being reported on Sch D and qualifies for the exclusion), the 2nd floor (sale being reported on 4797), Form is 4797 is showing a gain, filled out Form 982 to exclude from gross income, but I am skipping a step, becuase the gain on 4797 is showing up on the 1040 and a tax is due. Any quick help on this would be greatly appreciated. Thanks MAS Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted April 5, 2012 Author Report Share Posted April 5, 2012 I think figured it out myself, I had to increase the basis of the property to the amount of forgiveness to be wash. Quote Link to comment Share on other sites More sharing options...
Elrod Posted April 5, 2012 Report Share Posted April 5, 2012 You are absolutely correct, Mas...............Good job. Remember to include in your charges, Your expertise. Quote Link to comment Share on other sites More sharing options...
jainen Posted April 5, 2012 Report Share Posted April 5, 2012 >>I had to increase the basis of the property to the amount of forgiveness to be wash.<< When canceled debt is excluded from income because of bankruptcy, you must REDUCE the basis of the property. See Form 982 and instructions. He can not exclude capital gain on Form 4797, even if it occurs in foreclosure due to bankruptcy. In fact, it seems poor planning for his bankruptcy means his gain is now higher. Quote Link to comment Share on other sites More sharing options...
Elrod Posted April 6, 2012 Report Share Posted April 6, 2012 Mas, Pub 523...will help you. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.