Discussion:Basis of capital asset for expenses incurred post sale
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Discussion Forum Index --> Advanced Tax Questions --> Basis of capital asset for expenses incurred post sale
Discussion Forum Index --> Tax Questions --> Basis of capital asset for expenses incurred post sale
Jastaxes47 (talk|edits) said: | 28 September 2007 |
| I have a client that originally told me that he sold his personal residence in 2005 and he quailified for the 500,000 exclusion and therefore we did not report any gain on the sale in 2005. He is now being sued by the buyer and realizes that the property was really his second home that he did not rent at any time. He has a gain to report in 2005 and we will amend the 2005 return. My question is how to account for any and all expenses he will incur or has incurred post 2005 regarding the sale of his second residence. I realize that he will not be able to report a loss but just want to minimize his gain. Thanks for any help out there. JAS | |
| 28 September 2007 | |
| did he ever live in this second home as a primary residence? | |
Jastaxes47 (talk|edits) said: | 28 September 2007 |
| no- he had a home in LA and I guess he just used the other property as a true second residence. | |
| 28 September 2007 | |
| Under the Arrowsmith Doctrine, the payment in the current year relates back to the original sale and would be treated as a capital loss in the current year. However, the loss would appear to be nondeductible under Internal Revenue Code ยง 262. Also, see Rev. Rul. 54-95 for the impact of selling a portion of a personal residence at a loss. | |
Jastaxes47 (talk|edits) said: | 28 September 2007 |
| Is there any way possible for the taxpayer who reports a capital gain on the sale of the second residence in 2005 to offset that gain in subsequent years when they incur additional expenses, relating to that sale, in subsequent years. thanks for your help so far!! | |
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