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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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We put 10% down [$37,500] on condo to be built in 2005. By

Customer Question

We put 10% down [$37,500] on condo to be built in 2005. By 2007 when condo was NOT finisheded, [after the stated two year promise] we sued to get our money back. After 10K in legal bills, we got a return of only $32,000. We also lost ALL of the interest on the escrowed $37,500, even though we had paid tax on a portion of it already. This was all settled in 2008. How [where] do we deduct this loss on our 1040 IRS Return?
Submitted: 8 years ago.
Category: Tax
Expert:  RD replied 8 years ago.
Was this a personal residence or an investment(rental) property?
Customer: replied 8 years ago.
investment: either as rental or sell the property.
Expert:  RD replied 8 years ago.

If this was an investment property than you can claim the deduction for loss on this investment on Sch D.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 8 years ago.
No, this is not helpful. Schedule D asks for property description as well as 'date acquired' and 'date sold.' We never actually closed on the property. We had to sue to get our deposit back when the property was still unbuilt after 2 years. There was no 'sales' price. This transaction does not seem to fit into the Schedule D. Does it?
Expert:  RD replied 8 years ago.

Since you invested the money and received less in return, this is the schedule that you will use to report your loss(investment loss). You can add a note to your tax return explaining your entry on the schedule if you wish.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.