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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I HAD RENTAL PROPERTY IN FLORIDA WHICH I BROUGHT 185000 IN

Resolved Question:

I HAD RENTAL PROPERTY IN FLORIDA
WHICH I BROUGHT 185000 IN MARCH 2005 THE PROPERTY WAS SHORT SALE IN THE CALENDAR YEAR 2012. I RECEIVED FORM 1099 C FOR 100,924
I WILL DECLARE MY SALE OF PROPERTY ON 4797 USING THE COST MINUS DEPRECIATION -SELLING COST - MINUS CANCELLATION OF DEBT AND SELLING PRICE WHICH IS REPORTED ON FORM 1099 S- (PROCEEDS FROM REAL ESTATE TRANSACTION)
mY QUESTION IS CANCELLATION OF DEBT IS TAXABLE OR NOT OR JUST MENTION ON FORM 832
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!


Considering your situation - you do qualify to exclude the canceled debt as "qualified real property business indebtedness" - still you will need the tax attribute reduction - means the basis should be reduced by the amount of debt forgiven.


Use Form 982 - www.irs.gov/pub/irs-pdf/f982.pdf - specifically - for rental property - check the box 1(d) - Discharge of qualified real property business indebtedness


, and put the forgiven amount $100,924 on the line 2 and on line 4 and line 10a.
The line 10 is specifically to reduce the basis.

LEV :

The disposition of the property is reported on Form 4797 - http://www.irs.gov/pub/irs-pdf/f4797.pdf - is to report the disposition of business property - rental property in your situation. To calculate your gain or loss - you will use an adjusted basis reduced by the amount of debt forgiven.
So you might have a gain or a loss on the disposition.

Customer:

Thank you for reply. Do I have fill up special form for state of california

Customer:

Beside, I can not print your reply can you e mail me so I can print and keep for my records

LEV :

No special form - California follows federal rules this matter.
You may copy and paste the text into your local document.
You will be able to print as a regular web page when we close the chat - use same address - I will switch out from chat mode when we done.

LEV :

Please be aware - experts do not have access to your account and may not initiate e-mails.

Expert:  Lev replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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Expert:  Lev replied 1 year ago.
Just in case you were not able to use the chat - I am switching to Q&A mode and porting the answer below.
Please feel free to communicate if you need any clarification or have other tax related issues.

No special form - California follows federal rules this matter.
You may copy and paste the text into your local document.
You will be able to print as a regular web page when we close the chat - use same address - I will switch out from chat mode when we done.
Please be aware - experts do not have access to your account and may not initiate e-mails.
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22344
Experience: Taxes, Immigration, Labor Relations
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