AdamHasTaxQuest
Mar 16, 2017, 05:48 PM
What is the proper way to reflect a nondeductible real estate loss on Form 8949? The loss is caused by closing costs that aren't listed on my 1099-S. I understand that it's up for debate whether one can deduct capital losses on an inherited personal residence, but assume for the sake of argument that the losses are not deductible (at least until the issue is resolved). How would you report this transaction on Form 8949?
For simplicity, assume that the FMV of the house was $200,000 at the time of death, and that the house was sold by the heir 6 months after death for $200,000 with $12,000 closing costs. The 1099-S only lists $200,000 as the Gross Proceeds, with no mention of the closing costs. So I assume I would list this on Part 2, with box F checked, and I would use codes E and L. (These codes indicate that selling expenses aren't reflected on the 1099, and that the loss is nondeductible, respectively.) But what do I put in columns D, E, and G? Are the proceeds $200,000 or $188,000? I assume I should list $200,000 as the basis. Is the adjustment in column G a positive number or a negative number? The IRS instructions contradict itself on this matter. Either way, if it's a nondeductible loss, the result should be zero in column H, but I want to make sure I'm reporting this correctly. Also, what do I put in column A, for the description of the property? Is it just supposed to be the property's address? Thanks in advance.
For simplicity, assume that the FMV of the house was $200,000 at the time of death, and that the house was sold by the heir 6 months after death for $200,000 with $12,000 closing costs. The 1099-S only lists $200,000 as the Gross Proceeds, with no mention of the closing costs. So I assume I would list this on Part 2, with box F checked, and I would use codes E and L. (These codes indicate that selling expenses aren't reflected on the 1099, and that the loss is nondeductible, respectively.) But what do I put in columns D, E, and G? Are the proceeds $200,000 or $188,000? I assume I should list $200,000 as the basis. Is the adjustment in column G a positive number or a negative number? The IRS instructions contradict itself on this matter. Either way, if it's a nondeductible loss, the result should be zero in column H, but I want to make sure I'm reporting this correctly. Also, what do I put in column A, for the description of the property? Is it just supposed to be the property's address? Thanks in advance.