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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55594
Experience:  29 years of experience as a tax, real estate, and business attorney.
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My Father Quitclaimed his house to me for $1. He is now living

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My Father Quitclaimed his house to me for $1. He is now living with us in our home.
We are going to sell his home for $250,000 he paid $300,000.
Can I claim a capital loss?
Good afternoon. In order to claim a capital loss, you would have to take the position this is "investment property" and thus a loss on sale would be considered a capital loss from the sale of investment property. Treating it as investment property would allow a deduction of the loss to offset any capital gains for the year and then up to $3,000 of other income. Any unused portion could then be carried over to future years. But, this would be a very aggressive approach given the case of Moore v. Comm., T.C. Memo. 2007-134 (2007). In that case, the Tax Court ruled that holding property solely for appreciation wasn't sufficient to support a classification as investment property. So, if the IRS were to challenge your position on the loss, you could expect them to contest your classification of this as investment property.

This is the part of my job I don't like...when the law is not in favor of my customer. I wish I could tell you that the loss was clearly deductible, but, I can only provide you information based on the law so that you can act on the best available information to you. ………..I wish I had better news, but can only hope you recognize and understand my predicament and don't shoot the messenger. I'm sorry!

Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!
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Thank you so much for the positive rating! I appreciate having had the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help! For easy access, my bookmark is: