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Category: Tax
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Experience:  over 40 years experience in tax matters
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Hi...did a Chap. 7, got a discharge on a rental property, which

Customer Question

Hi...did a Chap. 7, got a discharge on a rental property, which was forclosed on afterwards.... Recieved a 1099 A. CPA, that I was going to use (not now), says I need to work out the adjusted cost basis, etc. etc., to figure out what I owe in Cap. gains. I think he's crazy, as the tax code is clear, that any debt discharged through bankrupcy is not taxable. It's my intention to just use a form 982, and send a copy of my discharge. ...So who's right?....
Submitted: 5 years ago.
Category: Tax
Expert:  CGCPA replied 5 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.


Unfortunately, the CPA is correct. Debts of a personal nature which are discharged in a Chapter 7 are not taxable but a rental is business property and the debt associated with it is treated differently. You will need to do the work.

CGCPA and other Tax Specialists are ready to help you
Customer: replied 5 years ago.

Can you lead me to where in the tax code it says that? There seem to be so many opinions about this, and I really wonder if the IRS will follow up, if I just do what I said I was going to do...

Expert:  CGCPA replied 5 years ago.
I will get the law on this and return momentarily.
Expert:  CGCPA replied 5 years ago.
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Customer: replied 5 years ago.
Thanks I will read up on it. I accepted your first answer, so I won't push that green button again...don't want to get charged twice. Thanks for the help.
Expert:  CGCPA replied 5 years ago.
I am always happy to assist.

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