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Stephen G.
Stephen G., Financial Advisor
Category: Capital Gains and Losses
Satisfied Customers: 7152
Experience:  Senior Tax Expert; CPA/PFS(retired)Personal Financial Planner; Small Business & Professional Mergers & Acquisitions
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Taxpayer has sold 2nd residence - not rental in a short sale

Customer Question

Taxpayer has sold 2nd residence - not rental in a short sale 1099S, for much less than he bought the house. Also has received 2 1099C, one for him and one for his wife for the same amount of discharge each, and an additional one for another amount on his name.
Reporting sale on 4797.
Could they take the loss on a 2nd residence - not rental.
Could they file 982 for discharge.
Please help. I need your advice.
Thank you
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Stephen G. replied 1 year ago.

There is no loss allowed on any personal use property, primary residence or not.

When you are referring to a 2nd residence, are you referring to a property that the taxpayer occupied as a primary residence or a 2nd home?

Form 4797 is used for business property; non-personal use property, not for any type of personal use residences.

Was the couple insolvent at the time of the debt forgiveness as indicated on the 1099Cs?

Customer: replied 1 year ago.
they are insolvent.
It is a 2nd home, never been a primary residence. Neither rental. What form to use, please: Sale of Home?Thank you,
Customer: replied 1 year ago.
Is there any response?
Customer: replied 1 year ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  Stephen G. replied 1 year ago.

The sale would be reported on Form 8949, but the loss would not be taken, so you need to indicate that it is personal use property so the loss is not deductible.

The 1099Cs would be reported using Form 982 and following the instructions for the Insolvency Exception.

Expert:  Stephen G. replied 1 year ago.

I don't know if you actually want to speak by phone or not, but that is the additional information you requested.

Let me know if you still want to talk by phone or if that was an error. We've been having some false positives lately on the phone call requests.

Please remember to rate my response as that is the only way we receive credit for our work.

Steve G.

Customer: replied 1 year ago.
I would appreciate if you couldl me tomorrow around 11 am. Thank you.
Expert:  Stephen G. replied 1 year ago.

OK, will come as close to 11 as I can.

I'll have to post a Premium Service offer.

Steve G.