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.

You must report the sale on Form 8949.

If it is a loss, report the sale on Form 8949 by entering Code L in Column (f) and entering the loss as a positive amount in Cloumn (g) so that Column (h) is $0.

Thanks. So, in other words, I would enter $188,000 as my proceeds in Column (d); $200,000 as my basis in Column (e); and $12,000 as the adjustment, entered as a positive number in Column (g). Do I have that correct? Also, what should I put in Column (a) to describe the property? Do they just want the address? Or do they want a basic description of the asset (e.g. "Inherited personal residence," "Single-family home," etc.). Thanks again.

I would put "Single Family home at Whatever the address is"

Alright, thank you. What about my figures in Columns (d), (e), and (g)? Are they correct?