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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12035
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I sold my main home at a loss. I know I don't qualify for

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I sold my main home at a loss. I know I don't qualify for the $3000 deduction but when I report the sale on 8949, it automatically transfers to schedule D and gives me the deduction. How do I correct this? ...i think I have to report it because I received a 1099-S

Hi,

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My name's Lane. I can help you here.

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You've likely answered something in the software that indicates that this is a rental, or som other investment property.

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As it sounds like you know, personal use property (primary, secondary homes, and other) do not create a tax loss.

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I would go back to the personal information section of whatever software you're using ... OR maybe the assets list or area, and be sure that you've indicated that this is a personal use property (may be as simple as a check-box)

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I use a professional tax prep and modeling software for my clients, but if you'll tell me what software you're using I can try to look up in our knowledge base, how this is done in your particular software

Customer: replied 9 months ago.
I use taxwise.I inherited three properties located next to each other. The FMV at that time is greater than sale price, plus adjustments for sales expenses results in a loss. I am listing the three properties on 8949. Because I received the 1099-S. I sold all as a lot therefore there is only one 1099-S. All inherited and sold same time same time. Two that are rental and one that I lived in for years. The two rentals result in approx $40K losses. I can deduct $3K yearly for that amount correct? And the property I lived in results in approx $20k loss but from what I understand, I can't take a deduction for that loss. However, I listed all of them on 8949 and they all transfer to schedule D which gives me a 60k loss! So I'm trying to exclude $20 from the schedule D. The only thing I can think of is on the 8949 under column F, I put code "EH" for my main home and code "E" for the two rentals.
Customer: replied 9 months ago.
I even filled out (I believe it's of 2) page 2 of the schedule D that says "Sale of main home" -I was supposed to do that right?

That's right ... you can use any capital loss (first against any capital gains, and then 3000 against all income - then that repeats going forward)

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Yes, it looks like you've done everything correctly in terms of the forms (column F is where you would make an adjustment fora main home)

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But it sounds almost like youre doing this manually ... most softwere packages would simply ask you for a list of assets, you would indicate tat one was the main home, and then the forms would generate automatically ... 8949 flowing to schedule D

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I wonder if you'll need to enter three separate 1099-S'

Customer: replied 9 months ago.
This software doesn't ask for that. You can't enter 1099's unless it's a 1099-M. I just went straight to the 8949 cuz this software isn't set up where you enter the 1099 S or 1099 I or E or C or whichever ...or it doesn't ask questions beforehand. I know other software like tax cut or Drake does

What software are you using?

Customer: replied 9 months ago.
Taxwise

Bear with me a moment

Customer: replied 9 months ago.
Ok
Customer: replied 9 months ago.
But is everything else correct? I've got the right idea and the codes correct?

Yes, your understanding, is spot on.

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Here's an excellent place to check the codes:

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http://cchsfs-taxwise.custhelp.com/app/answers/detail/a_id/14704/~/codes-for-form-8949---columns-f-and-g

Customer: replied 9 months ago.
Oh! Maybe I also have to use code L ?

I bet that will DO it. Good pickup ... That's there for just this situation. (not deductible)

Customer: replied 9 months ago.
I'm leaving this open for now because I need to go back to work to change it in my system. Probably today.

That leaves me uncompensated for the wotk. You can ALWAYS come back and review. Simply bookmark this URL

Customer: replied 9 months ago.
I meant I want to see if adding an L works if not, then we can resume with the same question

That's fine ... let me know ...

Customer: replied 9 months ago.
I tried the code L
Customer: replied 9 months ago.
Still doesn't work

Well, I can help you tax law issues, and tax procedures issues.

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I can can also verify that you understand, correctly, that you can't take the loss on the personal use property.

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But this has become a tax software specific issue, more specifically Tax Wise.

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Other than telling you to be sure that there's no way to indicate whether the property was personal use when first entering each property (which IS how Turbotax and H&R Block handle this, I believe) I'm afraid you have the extent of my wisdom.

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My recommendation is that yoiu call Tax Wise support. I'm sure they can help,

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See this (and note the last bullet point where it says, "Can’t find what you’re looking for? Open a support case with Customer Support CLICK HERE"

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https://support.taxwise.com/newsmanager/Support.aspx?id=289

Customer: replied 9 months ago.
This is what my 8949 looks like
Customer: replied 9 months ago.
Oops wrong one
Customer: replied 9 months ago.
This is what it looks like

Why don't you just adjust in column G (to make H zero)

Customer: replied 9 months ago.
That's what I did in the first picture I sent
Customer: replied 9 months ago.
I had to over ride the entries
Customer: replied 9 months ago.
What I mean is that I made column G zero ...but that made column H -16K
Customer: replied 9 months ago.
I had to ask override the entry in column H to zero that's why it looks gray

Right ... all software has overrides for the reason that there can be times when the software can't handle everything.

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Again, I don't know tax-wise well enough to say, categorically, that's the case here ... but it's very possible.

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And ALSO again, :0) , I'd look to see if there was a way to enter the property in a way, up front, such that the one property would be tagged as personal use so that the software would make that adjustment.

Customer: replied 9 months ago.
Ok so is the first picture what it's supposed to look like? That's correct right?
Customer: replied 9 months ago.
Are the codes correct, everything?

The code should just be L on the main home

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H is when there is a gain

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E isn't necessary here

Customer: replied 9 months ago.
Oh ok thank you
Customer: replied 9 months ago.
I'll call the software and see what they tell me, otherwise I'll override it so it looks like the first pic.

Yep, that'll work. Bot***** *****ne here is that you're coming up with the right tax number.

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it would only be upon audit that this would even matter anyway ... and you've correctly not taken a deduction when there was none TO be taken... That's the substance here.

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Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …is thanks enough.

Otherwise I receive no crediting for the work here.

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Thank you!

Lane

Lane and other Tax Specialists are ready to help you
Customer: replied 9 months ago.
Awesome! Thanks for everything