I hope someone has experienced this. My client bought her home in 2008 using the FTHB credit. She repaid $500 in both 2010 and 2011. In 2012 she sold the home for a loss, so the debt was forgiven, 5405 disposition was filed, and $500 was not paid. Her 2013 return was calculated without a 5405 with no problem.

Her 2014 return was done...