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To Q & A...
I think I need to talk to an expert in this.... I was hoping you would be that. I have read that doc before. I assumed that because it was rented for the last 4 years, it was a business. Since I need to verify that and you cannot help me, I will end this. I cannot give you an OK for what you have told me. Thanks anyway.
Thanks for not giving up so easily.
I have spent considerable time on this....you have no idea. I have read 4681 multiple times. They give a bunch of examples, but none that are exactly like mine. But...here are more facts. We never lived in it. It has always been rented. I have filled out schedule E for the last 4 years to report rental income, expenses, depreciation, etc. I am pretty sure (pub 4681) that this is a business expense....and now loss.
I found previously a "similar" answer on www.justanswer.com. Here is the link. Very similar, but I just couldn't quite figure it out because they kept changing the numbers involved. Do I need 4797? Read this one:
Let me know what you think. Form 982 seems fairly easy. Fill in line 2 with my 104m and then line 4, I believe. But after that, I am not sure after reading the one above.
First let me thank you for YOUR patience! Tax forms are a "strange breed" to me.
Before your answer above, I used my Turbo Tax to enter MY numbers to see what I would get. I put the 104m forgiven on form 982 and TT put that on my 1040 line21 Other Income as "Cancelled debt income".
On 4797, I put the 299m cost - 29m depreciation - 115 sale price to get loss of 154m. TT put that on 1040 line 14 Other gains form 4797. So net was loss of 50m.
Now doing it your way as described above comes out with the same basic number, 50m loss. The difference I see is that if I made a profit, the amount would be subject to ordinary or capital gain and form 4797 would take care of that......in lieu of not being taken care of on 1040. Am I right on that?
One last question: In the sample that you referred me to on page 7 of pub 4681, it says there are two limits to how much I can exclude. 1) No more than the adjusted basis.....in my case, 299m cost - 29m depreciation = 270m using pub example. Your way above says 299m - 104 forgiven = 195m.
or 2) What was owed 208m - sale price 115m = 93m. So does that mean my 104m forgiven on the 1099-c is over the 93m limit and I can only exclude 93m? Maybe I am reading too much into this. Sorry.
I am trying to look at the big picture of how the IRS handles this. The forgiveness amount is taxable. I get that. The business loss, in my case, is not. I guess what I don't understand is how the numbers bounce from form to form.
Thanks so much. I think we're almost there.....Larry