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CGCPA
CGCPA, CPA
Category: Tax
Satisfied Customers: 3820
Experience:  over 40 years experience in tax matters
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Hi...did a Chap. 7, got a discharge on a rental property, which

Customer Question

Hi...did a Chap. 7, got a discharge on a rental property, which was forclosed on afterwards.... Recieved a 1099 A. ...one CPA, that I was going to use (not now), says I need to work out the adjusted cost basis, etc. etc., to figure out what I owe in Cap. gains. I think he's crazy, as the tax code is clear, that any debt discharged through bankrupcy is not taxable. It's my intention to just use a form 982, and send a copy of my discharge. ...So who's right?....
Submitted: 6 years ago.
Category: Tax
Expert:  CGCPA replied 6 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

 

Unfortunately, the CPA is correct. Debts of a personal nature which are discharged in a Chapter 7 are not taxable but a rental is business property and the debt associated with it is treated differently. You will need to do the work.

CGCPA and 2 other Tax Specialists are ready to help you
Customer: replied 6 years ago.

Can you lead me to where in the tax code it says that? There seem to be so many opinions about this, and I really wonder if the IRS will follow up, if I just do what I said I was going to do...

Expert:  CGCPA replied 6 years ago.
I will get the law on this and return momentarily.
Expert:  CGCPA replied 6 years ago.
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Customer: replied 6 years ago.
Thanks I will read up on it. I accepted your first answer, so I won't push that green button again...don't want to get charged twice. Thanks for the help.
Expert:  CGCPA replied 6 years ago.
I am always happy to assist.