I moved from Anchorage Alaska to Houston TX October 2012. As part of this process I sold my house in Alaska for $552,000. My initial purchase price was $661,003. This made for a loss on sale of $99,003.77.
My company had a relocation policy to cover this loss on sale, and gave me this amount as a benefit associated with the relocation. This is good, as I did not suffer the actual loss. However, the way they did it was to show the $99,003.77 as income. This has the effect of putting me in a higher tax
bracket than I'd otherwise be in, even if some added tax was paid by the company to try to compensate for this added income (I am not sure what tax assumptions they made, but I think it was 20% of the loss on sale = $19,800.75.
The net effect of realizing $99,003.77 plus other relocation expenses was to put our taxable income
(line 43) up to $446,851. Line 7 1040 was $524,525.
At this point (I have filed for extension) I need to calculate the moving expenses and get into line 26. My question is how to consider the extra 'income' from loss on sale of the home in Alaska. Can I show the loss on sale as a $99,003.77 as a moving expense, or loss on the home, which then offsets some of the 'income' from the relo benefit from my company?
Where and how do I do this, if I can take this loss of the home sale?