Sale of Rental Property

[mrbill]

Client sold a rental property at a loss. When sold in November, 08, client owed $418K to INDYMAC Federal Bank. At the passing, bank received $266K towards the mortgage (all that was available). Now they have issued 1099-C - Box 2 (amount of debt canceled): $152K; Box 3 (Interest included in box 3): $20K; Box 7 (FMV) $275K. Do I have to report $152,000 as income ?
My understanding is that a like loss on a personal residence is not taxable, but I am unsure for rental property. Thanks, Cheers.....

[David1980]

Probably will have to include it in income. Be sure you get the loss right though, the selling price should basically be the smaller of FMV or loan outstanding + any proceeds received. Normally on the rentals the loss on 4797 and gain from canceled debts basically cancels each other out.