NOL & 1099C on a flip house Question

[Gizzmo]

I have been researching this question for 2 weeks and I would just like some other thoughts on this topic. My client bought a house to flip in Florida for $385,000 and sold it for $355,00 and did a short sale. The mortgage company gave him a 1099C Box 2 (70,980) and Box 7 FMV (380,000). His expense to fix it up were $141,310. He does not have a business, he bought the house for investment. So I did a 4797 to show the sale. I put the 1099C Cancellation of Debt on 1040 line 21($70.980, other Income). On the 1040 Line 14 I show a large loss. I first want to make sure I did the return correctly and can I carry forward the loss to next year and if so, how do I do that ? I want to elect not to carry the loss back, just forward. I am thank you for any help or advice you can give me. Thanks Gizzmo

[jainen]

>>On the 1040 Line 14 I show a large loss<<

His story is that spending $141,000 didn't add anything to the value? Well, I trust we aren't talking travel & entertainment costs here. Anyway, spending that kind of dough on things that the market doesn't like suggests a personal dream home more than investment goals. Did he happen to tell the mortgage company this overpriced acquisition was owner-occupied?

Since he doesn't have a business, don't use Form 4797 "Sales of Business Property." Report the loss on Schedule D unless you determine it was personal-use property.

[Gizzmo]

>>On the 1040 Line 14 I show a large loss<<

His story is that spending $141,000 didn't add anything to the value? Well, I trust we aren't talking travel & entertainment costs here. Anyway, spending that kind of dough on things that the market doesn't like suggests a personal dream home more than investment goals. Did he happen to tell the mortgage company this overpriced acquisition was owner-occupied?

Since he doesn't have a business, don't use Form 4797 "Sales of Business Property." Report the loss on Schedule D unless you determine it was personal-use property.

[Gizzmo]

He lived in Michigan and bought the Flip house in Florida. He showed me cost of $141,000 that he put into the house to fix it up to sell. I really don't know what he told the mortgage company. He bought the house just before the housing crashed. So understand what your saying just use Schedule D and not 4797 which I understand. Would you agree that the 1099C goes on Line 21 (other Income). I know he never lived in the house. All his w2 income is from Michigan. Thanks for all your help.

[jainen]

>>bought the Flip house in Florida<<

Nice place to visit.

>>don't know what he told the mortgage company<<

Maybe HE knows. At least you can probably figure out what he told the IRS about the interest deduction on a second home.

>> 1099C goes on Line 21<<

Unless he threw everything he had down that Sunshine State hole, and was insolvent.