I have a client that purchased a rental duplex in 2012. The total cost including improvements which included furnace, hot water tank and windows totaled $48,852. Depreciation allowed was $12,246. The sale price was $35,000. Since it was sold at a loss I cannot use the installment sale method, therefore I am reporting it on Form 4797 as a loss of $1,606. The buyers must close by May, 2019.
My question is: What happens if the buyer does not fulfill the terms of the land contract? Since I will have taken the loss on the 2016 return do I have to go back and amend the 2016 return or is it somehow corrected in whatever year it occurs?
My question is: What happens if the buyer does not fulfill the terms of the land contract? Since I will have taken the loss on the 2016 return do I have to go back and amend the 2016 return or is it somehow corrected in whatever year it occurs?