Vityaba Posted October 10, 2013 Report Share Posted October 10, 2013 Please see the following scenario and let me know if it makes sense: a TP had a short sale of his rental property owned since 2008 Basis $250K, 1099-C $220K, sale price $50K. On Form 982 I am selecting maximum allowed Qualified Real Property Business Indebtedness exclusion which will bring the basis down to $30. I then show $20K long term capital gain on Schedule D. This way the TP avoids paying ordinary income rate on the cancellation of debt "income" Thank you for your input Quote Link to comment Share on other sites More sharing options...
michaelmars Posted October 10, 2013 Report Share Posted October 10, 2013 yes you have to reduce all other tax attributes. Quote Link to comment Share on other sites More sharing options...
Mr. Pencil Posted October 11, 2013 Report Share Posted October 11, 2013 I am selecting maximum allowed Qualified Real Property Business Indebtedness exclusion which will bring the basis down to $30. I suppose that's right, assuming he was not insolvent. I don't quite get the numbers. Was the outstanding loan $270,000? Quote Link to comment Share on other sites More sharing options...
ed_accountant Posted October 11, 2013 Report Share Posted October 11, 2013 Loss on Sale of Rental property would flow to form 4797, sale of business property. 1099-C would flow to form 1040 misc income. Form 4797, Loss on rental property, $50 -$250k= -$200K Loss Form 1040, Misc Income, 1099-C $220K income Net 20K ordinary income Quote Link to comment Share on other sites More sharing options...
TaxMan60601 Posted October 11, 2013 Report Share Posted October 11, 2013 Totally agree with Ed. Do not forget depreciation. Quote Link to comment Share on other sites More sharing options...
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