joanmcq Posted April 6, 2011 Report Share Posted April 6, 2011 Have a client who lost his job in CA and ended up moving to CO for a new job. Their house in CA was short-sold a few months later. Does CO conform to the principal residence exclusion for cancelled debt? This was all acquisition debt, no-refi's. Also, of course they were not living in the house by the time the short sale finally went through since he had to move to get a job. This late I'm wondering if they qualify at all.... Quote Link to comment Share on other sites More sharing options...
imjulier Posted April 6, 2011 Report Share Posted April 6, 2011 Joan- There is no difference in CO taxes vs. federal taxes on the cancellation of debt. CO almost always just flows from the 1040 with no adjustments but there are a few....this just isn't one of them. I haven't had this sitaution but I just double checked the CO dept of revenue website and browsed the instructions and didn't find anything on this which to me means no difference. Not sure why you think they wouldn't qualify....it was their primary residence, or am I missing something? Julie Quote Link to comment Share on other sites More sharing options...
imjulier Posted April 6, 2011 Report Share Posted April 6, 2011 Another thought, this sounds like CA income to me and should be apportioned that way on the CO retrun. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted April 6, 2011 Author Report Share Posted April 6, 2011 No income if they qualify for the exclusion; sale at a big loss, no cash out refi's or anything. Just bought at the wrong time and lost job. Next year I get to deal with the proceeds from the age discrimination settlement My concern is that they moved on May 15, but the house didn't close until Dec. Short sales take forever. Quote Link to comment Share on other sites More sharing options...
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