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Capital Gain/Loss or Wash


Terry D EA

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Wow, I'm gonna say this at the risk of offending someone. The responses to this post have gone all around and away from the original question. Judy pretty much summed it up. If this property is personal then no loss. That was the only thing I was looking for. I initially took the wrong road and was not thinking about the character of this so called equipment. I do apologize for that bit of confusion So, I am at the point of saying that the day the scrap dealer picks up the junk or equipment or whatever it is, the price received is FMV because this is indeed personal property and therefore a wash. No gain and no loss. Plain and simple by the code, basis is FMV on inherited personal property at the date of death. I can't believe the trip this post had taken. It turned into various scenarios and ended being compared to logging transactions. I mean really, all of us, and me included should stay with the facts stated in the original or updated post  to help the poster. Even if there appears to be missing information or more information needed, it is better to ask for the additional information than to put one's spin on it or making it a contest to prove one's position. I must say some of this was not helpful. Now, shoot me for my opinion.

I'm trying my best here. I am not angry at anyone and if I come off that way, I apologize. I have been dealing with my identity being stolen for the 4th time in a year and a half. Dealing with Equifax is like dealing with 3 year old children. I don't think they have anyone located in the US answering the phones. When they do, if you can find a number, they're dumber than a dead rake. Experian, no problem, dispute settlement crap removed from my credit report. Transunion, no problem same as Experian. Equifax, don't ask. All I know is my credit is now frozen everywhere. One week and three days of dealing with idiots on the phone is mentally exhausting. I asked Equifax the magic question. It is MY credit, I cannot access it, get denied every time online. The so called security questions are wrong and bam I'm locked out. But.....the thieves can get it like nothing. I have better luck seeing a friend at the bank to get my credit report from Equifax. They can get it and I can't. Yes, I can get it in fifteen to 20 days. By that time the dispute clock will time out. I mean what the hell?

I need to know if I can sue the crap out of Comcast for granting credit in my name when there was a 7 year fraud alert placed on my credit with all three bureaus, with a contact number to verify if the person applying for credit is actually me. No, they never contacted me. Just the collector did when the bill was never paid. I would think this activity would violate some fair credit reporting act or something. Probably another inside job. Here's the best part, Comcast doesn't even offer services where I live in NC. Okay rant over, I'm sorry to bore you all with this so I am going to bed now.  

 

Frazzled.jpg

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@Terry D SO sorry to hear of your aggravating troubles!  I do hope you can get through to an English-speaking grown-up at non-equitable f-x  (see, I'm trying not to be foul-mouthed/typed) before your deadline.  YES, there should be retribution from the company causing the problem.  And I hope you get some good sleep!

I think that at times we take an incident and then start exploring options - like an intellectual puzzle.  That doesn't help the original poster, though.  I've been on the receiving end of a few of those over the years, myself.  Glad that you did get what you needed and I'm not surprised at all that it was from Judy.

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This is the off-season Terry, so things sometimes get hashed out in unusual ways.  Sometimes the twists and turns help someone else out, and other times they are completely irrelevant. 

Sorry you're having trouble with the credit bureaus and ID theft.  That has to be maddening.  Personally, I'd at least run this by a lawyer to see if there's some sort of opportunity to get some satisfaction.  Just remember, if it can't kill you and eat you for dinner, you can probably deal with it. 

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@Terry D I'm sorry to hear about all what you've been going through.  Come here to vent any time to offload some of that stress if it will help. After all, who better to share with than a bunch of tax and financial nerds that would totally understand your frustration.  Glad you got the answer to your question too.

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On 8/21/2018 at 6:02 PM, jklcpa said:

  If you decide that this is personal property and you are still reporting the transaction that results in a loss, there is a code on Sch D to indicate that it is nondeductible.

Terry, if your decision is to treat this as personal use property I disagree.  Did the heir use it for personal use or entertainment?  I would treat it in the same manner as a personal residence that was inherited and put on the market without being used personally or as a rental.  It has been held by case law that type of property is investment property.

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17 hours ago, DANRVAN said:

Terry, if your decision is to treat this as personal use property I disagree.  Did the heir use it for personal use or entertainment?  I would treat it in the same manner as a personal residence that was inherited and put on the market without being used personally or as a rental.  It has been held by case law that type of property is investment property.

Thanks to everyone for the support. My client inherited some land or lot, if you will from his father, on that land or lot is some rusted out worthless equipment that an agreement is being reached with a scrap dealer to remove it at scrap prices minus a removal fee. No, this has never been used by anyone who inherited it for any purpose. The land was not investment property nor was the left over scrap equipment used for anything other than personal use by his father. The scrap equipment was not itemized in the will. Only the lot/land was part of the estate. No values for the scrap equipment had every been established. Please provide references to the case law you mention so I can see if this fits. I do agree with your statement if it was a residence that was never rental property or anything else. If that property was sold, then FMV is basis at date of death Any gains are taxable to the heir(s) Loss is deductible if the property was never converted to personal use by the heirs before they sold it. In my case, I still don't believe a loss is allowed. I think to do so, these items would have to listed as an inheritance and FMV determined. Then maybe. As far as I can tell, the FMV established of the land this junk is on was included the value of the land only. I will still be interested to see the case law and how this maybe determined to be investment type property.

 

On another note, I just received a phone call from a gentleman in the US from the Comcast fraud division that has escalated my case, says I need to do nothing else and that upon completion of the investigation all three CB's will notified to reverse the entries and clear up any damage this may have caused me. He also stated that in his position he could see the notes from the other fraud agents that I had spoken with, listened to the recorded conversations and those employees will be "coached" as they handled it completely wrong. HIs words not mine. However, there was no disagreement or sympathy from me. He was also interested in the fact the credit was granted without proving the identity of the person applying for the credit was actually me when an extended fraud alert was placed on my credit. They will be looking for the employee who was involved in that transaction and correct that problem. Now, do I believe all of this????? I want to so I can rest better but I will remain skeptical. When I get the final results in black and white, my credit restored, and the collection dogs called off, then I will finally rest. I thought it was really bizarre that every time I called the fraud division, they asked if I was a subscriber and if not would I want to be. Are you kidding me???? Burn me, rake me through the coals so I will over jump through every hoop possible to get your services. NOT!!!!! Thanks again to all for listening. You guys are indeed the best!

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6 hours ago, Terry D said:

The land was not investment property nor was the left over scrap equipment used for anything other than personal use by his father. 

It does not matter how decedent used the property.  For example in Marx(5 TC 173) court determined a yacht willed from husband to wife was investment property where wife put it up for sale after death of husband and was loss was allowed.  The fact that she never used it for personal use proved her profit motive  under section 165(c)(2).

In another case, Watkins (TC MEMO 1973-167) husband was willed personal residence from wife.  The court ruled property was held for investment since heir / husband  decided to put it up for sale within a week of wife's death.  Therefore he proved his profit motive per section 165(c)(2).  It did not matter that the house had been his residence while wife was alive. It also did not matter that he lived in it for a short period of time after it was bequeathed to him.  What mattered was that he was able to prove his intent was to sale it and was allowed to deduct loss.

So in the case of your client, it appears his thought was "heck I might as well sale this junk and make a little money off of it".  There is your profit motive per section 165(c)(2).

 

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