Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.
You use insolvency. One rental property does not constitute a trade or business nor was the indebtedness incurred in connection with real property used in any other business of yours; this would be like if you owned an office building or commercial building/warehouse that housed your trade or business.
Hi, Stephenplease let me know as
for my other questions.
Once you use the insolvency exception, they don't apply.
I don't need to fill out part II?
No part II, No basis adjustment; you don't continue to own the property.
what about some statement that i need to attach?
The worksheet to assist you in determining insolvency doesn't have to be filed.
Part I line 1(b) is the insolvency line;
1(a) is for bankruptcy
Have you ever helped file taxes with the same cituation and it went through and accepted. Please be honest I am terrified of IRS :)
Of course, we have a lot of insolvency cases here. The fact that they go through means nothing to any particular case. Those other sections couldn't possibly apply to you, so for you to understand it is just a process of elimination.
And if I am being audited what should I have ready?
Your worksheet computing insolvency
And waht back up to this spreadsheet, most items just an estimation.
Chances of being audited for this situation are somewhere between slim & none. The IRS is getting literally millions of Form 982.
Last question: in line 3 what should I answer?
No. It actually is "not applicable" but put No. I'd put N/A next to the No.
Thank you very much!
U R Welcome