Reporting a 1099-S Sale

[Thad]

A client bought in a 1099-S. He inherited the property. The land had a FMV of $71500. He sold the property for $40000. At this point, I do not know whether a family member purchased the land. If so, there is no lost. As far as I know, the land wasn't used for any business purchase. My question: Since he sold it for less than the FMV, how can we account for the sale and lost on Form 8949? And since it was a sale, and he collected $40000, is it reportable?

[Gary2]

A client bought in a 1099-S. He inherited the property. The land had a FMV of $71500. He sold the property for $40000. At this point, I do not know whether a family member purchased the land. If so, there is no lost. As far as I know, the land wasn't used for any business purchase. My question: Since he sold it for less than the FMV, how can we account for the sale and lost on Form 8949? And since it was a sale, and he collected $40000, is it reportable?

A 1099-S is always reportable. The rules changed around 2011 to always require reporting even if it's a non-deductible loss.

If it does turn out to be a non-deductible personal loss, it goes on the 8949 with code L, with the offsetting amount as a positive number in column g, giving you a zero in column h.

[Burke]

You don't say when he inherited the property. Nor do you say if he ever used it. How did he determine the FMV? Was there an appraisal? I would question him concerning the "loss."