FTHB Sold

[joanmcq]

My software e-flies MFS community property, and has for many years.

I can't believe a Sch D can't be efiled. Maybe he is referring to the 5405?

[David1980]

My software e-flies MFS community property, and has for many years.

I can't believe a Sch D can't be efiled. Maybe he is referring to the 5405?

Right, some software can efile it, some can't. It's one of the more common items that isn't efileable in some software.

5405 really ought to be e-fileable, but I guess I can understand how Drake might not support it. That is, the 2nd page would be e-fileable, and the first page not. Maybe it's simpler to just not support it at all than to support page 2 and prevent transmission when page 1 is present.

[Gary2]

So, would you match the selling value with the basis, since you can't take a loss?

I would use the actual basis, without adjusting it for the FTHBC, for the sake of consistency and additional record keeping.

I don't see anywhere in the Sch. D instructions where it says how to report a non-deductible loss, other than for wash sales. Hopefully your software allows you to mark it as a personal loss, and will do something acceptable. If it doesn't, then I'd just use the wash sale approach - add a second line, enter "Personal loss disallowed" in the description, and add the loss back in to zero it out.

[Possi]

Wonderful

I would use the actual basis, without adjusting it for the FTHBC, for the sake of consistency and additional record keeping.

I don't see anywhere in the Sch. D instructions where it says how to report a non-deductible loss, other than for wash sales. Hopefully your software allows you to mark it as a personal loss, and will do something acceptable. If it doesn't, then I'd just use the wash sale approach - add a second line, enter "Personal loss disallowed" in the description, and add the loss back in to zero it out.

Thanks, Gary.

[Kram BergGold]

Schedule D

For Schedule D you only reduce the basis by any FTHB credit that was not paid back. If the entire $7500 was paid back then you don't reduce basis. If there is a loss after any basis adjustment you just show the basis as equal to the sale price on Scheule D as you can't deduct a loss. I would attach a letter explaining this when you respond to the IRS notice.

[David1980]

I don't see anywhere in the Sch. D instructions where it says how to report a non-deductible loss, other than for wash sales.

It's in there. Just not obvious. Check the top right of page D-2. It's in the section "Capital Assets Held for Personal Use".

"For example, you have a loss on the sale of a vacation home that is not your main home and you received a Form 1099-S for the transaction. Report the transaction on line 1 or 8, depending on how long you owned the home. Complete columns (a) though (e). Because the loss is not deductible, enter -0- in column (f)."

In some software you can override column F to $0, or mark a box or whatever to indicate it's a nondeductible loss. Ideally the numbers all show up like any other sale except for column (f) which is $0. If my software wouldn't let me do it that way, I wouldn't feel bad about making cost basis = gross proceeds. Or like you suggested, a second entry like you would do with wash sales.

[Gary2]

David, thanks for finding that.