bankruptcy and a reantl property

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  • Kram BergGold
    Senior Member
    • Jun 2006
    • 2112
    #1

    bankruptcy and a reantl property

    If a taxpayer files for bankruptcy and has a rental property foreclosed upon there is no foregiveness of debt to pay tax on. I assume the passive losses he has been carrying of Form 8582 get trigered but no capital or ordinary loss is allowed to be claimed as there is no sale.
    Whereas In a short sale he reports foregiveness of debt but then gets to claim passive losses and an ordinary loss on the sale.

    Do I have this right?
    Tags: None
    • Gretel
      Senior Member
      • Jun 2005
      • 4008
      #2
      Just being on the edge with this myself. I think the forgiveness of debt and the sale or two totally independent processes. Only related in that respect that if you don't have to claim COD income because of insolvency than you have to reduce tax attributes, in this case the basis of the rental property.

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