Three siblings inherited 1/3 interest in their parents home. One sibling lived in the home for two years after the inheritance, the others did not. The house had a substantial decrease in value since the date of death and has been sold at a loss. Is the loss deductible to the siblings that did not utilize the home as a residence? If so, can anyone cite a tax court case, etc.? If no court case can be found substantiating the deduction, would this be a situation requiring disclosure?
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Last edited by Zee; 02-06-2009, 11:42 AM. -
I say no loss
As one sibling was living in the house the house was not being held for investment or rental purposes by the 3 partners, so no loss for anyone.
Think of a vacation home that you and I own. If I use the place for 15 days and you use it for zero my 15 days count against you. -
Another CPA (whom I greatly respect) has suggested that since the house was used as a residence by only one sibling, it can be considered capital property by the other siblings and qualify as a capital loss.
I'm more conservative and would probably not suggest taking a loss, or if one is taken including a disclosure.Comment
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I agree with the "other accountant", loss for non-residents.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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A good case could be made for either side of the argument but since I represent my client's best interests I would argue for capital loss treatment for the other two siblings.Comment
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This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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