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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4678
Experience:  35 years tax experience, including four years at a Big 4 firm.
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Short sale on a rental property. Adjusted cost basis is

Customer Question

Short sale on a rental property. Adjusted cost basis is 1.1M. Net SP was 500k. This leaves me with a loss of 600k. Added to this I have 400k of un-allowed losses from the last 10 years. Expecting 1099-C for 500k in the mail. can I offset the 1099 with the other losses? Can I fully use the other losses on my 2015 returns?
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.

Hi from just answer. I'm PDtax, and can assist.

Expert:  PDtax replied 2 years ago.

The suspended passive losses will be usable in the year of sale without limitation. That should allow you to use the 400k losses to offset the 600k debt forgiveness.

Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.

Customer: replied 2 years ago.
OK, so the suspended losses will mostly offset the 1099-C income. What about the actual loss from the sale, it 600k. Where does that fit in? Can that offset W2 tax liability elsewhere on the return?
Expert:  PDtax replied 2 years ago.

The interaction of the suspended loss, loss on sale and debt forgiveness income ask get 1040 treatment. The property sale is reported on 4797. Any available loss can offset w2 or other income.