In 2008 my client abandoned rental property and it was sold for back taxes. His basis in the property was $130,000 and his mortgage was $145,000. The property sold for $98,000. He's a new client and when he came in for 2008 taxes I made the mistake of calculating the transaction as a gain of $15000 (145,000-130,000). Didn't have all the information I needed..mea culpa. Should have been a loss of $32,000 before adjusting for Passive Activity limits, right?
In 2010 he receives a 2009 1099-A from the mortgage company showing a mortgage balance of $145,000+ and fair market value of $100,000. However, the client filed bankruptcy in 2009 and the debt was discharged.
I figure I have to amend 2008, but is it possible that there will be no gain for 2009, due to the bankruptcy? I'm not quite sure what do with the 1099-A.
I've had a lot of fun with this return. Thanks for any help you can give.
In 2010 he receives a 2009 1099-A from the mortgage company showing a mortgage balance of $145,000+ and fair market value of $100,000. However, the client filed bankruptcy in 2009 and the debt was discharged.
I figure I have to amend 2008, but is it possible that there will be no gain for 2009, due to the bankruptcy? I'm not quite sure what do with the 1099-A.
I've had a lot of fun with this return. Thanks for any help you can give.