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Anne
Anne, Master Tax Preparer
Category: Tax
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Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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I own two rental properties. One makes a profit and the other

Resolved Question:

I own two rental properties. One makes a profit and the other has been a consistent loss.
I have the loser for sale, and I am hoping to do a short sale, which means I will get a 1099
for the forgiven amount. The property will be sold at a loss which for the most part, will mmost likely be a greater loss than the COD. This means that the effect of forgiven debt will be neutalized.
     In order for this to happen, the sold property has to be considered one activity now, separate from the other whereas previously they were probably '''grouped".
     Is it routine for the IRS to allow the entire amount of the loss to be deducted on form 4797
for the sold property? (As if I only owned one rental and was disposing the "entire interest")
Thank you.   Mark
Submitted: 5 years ago.
Category: Tax
Expert:  Anne replied 5 years ago.
HiCustomerbr />
Thank you for using justanswer. Since you did not in fact dispose of the entire interest on all rental properties, (since you still own another rental) you must report the gain or loss on this sale individually on the 4797. However, since you are selling your entire interest of that rental home, you will check the "yes' box for disposing of the entire interest, since you are selling the entire interest for that particular property. You just can't group them on the 4797.

I hope this helps.
Customer: replied 5 years ago.

Hi Anne its taking me awhile to get back to you because it was late.

 

A couple of things....... Where do I check "yes" for disposing of entire interest? I dont see it on form 4797. And to summarize, what you are saying is that the entire loss for selling this one rental will be deductable in the year it is sold ....is this correct?

 

Thank you Mark

Customer: replied 5 years ago.
No reply yet-please see previous so we can wrap this up and I can pay
Expert:  Anne replied 5 years ago.
I apologize for the delay. I had class tonight.

The question re: is this a sale of the entire disposition was on the worksheet that Block used, and I apologize that I gave you the impression it was part of the 4797 form. Having that box to check or not really doesn't change how you handle the sale or the fact that you can take any loss you may have.

You may take your loss in full in the year of sale which will net against your other income (such as wages, etc)

I hope this helps clarify things.
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 1782
Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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