Taxpayers home is destroyed by fire. Taxpayer then sells lot, can they exclude any gain?
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Where is the gain coming from? From insurance reimbursement? Or did he sell the lot for more than the house cost? -
Sure, if they meet the 2-out-of-5 years rule for the house and the lot.Can they exclude any gain?Roland Slugg
"I do what I can."Comment
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Sale
Taxpayer sells the lot for a gain of 15,000 and he does meet the the 2 out of 5 years. Insurance did pay for the home.
Can he exclude gain on sale of lot?Comment
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Vacant lot sale: Basis
1. The facts do not suggest to be a single transaction with the 'sale' of the home via casualty loss insurance reimursement.
2. What was TP's basis in the lot, including additions for special tax assessments, expenses of sale, and any demolition costs TP incurred?
3. The facts suggest that the residence was destroyed, and TP receive insurance reimbursement for that and (it appears) did not rebuild the home.Friends double; family triple. Don't buy an audit for yourself. If someone has to go to jail make sure it is the client. Remember it is only taxes, nothing important.Comment
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Yes. I would like to know:
(1) how the "gain" of $15K was determined; and
(2) what was the time frame of the house being destroyed, getting the insurance reimbursement and the actual sale of the lot? Did the insurance reimbursement exceed the original cost of the home and lot? I assume the lot and the home were purchased in one transaction originally?Comment
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sold
The house and lot were purchased together. The lot was sold within in 6 months of the fire. House totally destroyed
and insurance covered home. Could they qualify for the exclusion? Lot sold for 25,000.Comment
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Here is the problem: you say "the insurance covered the home." That still doesn't tell us what amount he received from the insurance company.The amount he received for the house, plus the sale of the lot ($25,000), is the "sales price."
If you take the sum of those two figures, and subtract the original cost of both, plus selling expenses of the lot, plus any improvements made over the years to either, and the difference is less than $250,000 (Single) or $500,000 (MFJ), then any gain is excluded under 121. If he has a loss, it is not deductible.
I think you are trying to treat them as two separate sales, when they are treated as one.Comment
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