Short sale

[GeorgeM]

I have a client who had a short sale of personal residence, with a loss. i understand they do not have to pay taxes on the loss, bit I can't seem to visualize how to report it on the 1040.

If I use Schedule D, do I just over ride the loss, or should I just let them paper file with no Schedule D and attach the 1099-C and 1099-S to show the sale.

Thank you for any input.

[grandmabee]

see the tab for personal residence. it will disallow the loss per sec 121

Did they receive a 1099-S ? If not per instructions you don't even report it.

[LindaB]

If you have a 1099-C you have to report the sale on sch. D and also calculate the COD income, use form 982 to exclude it from income if the home is a qualifying personal residence.

[jainen]

>>I can't seem to visualize how to report it on the 1040.<<

Visualize the instructions to Schedule D at My link. "Report the transaction on line 1 or 8, depending on how long you owned the home. Complete columns (a) through (e). Because the loss is not deductible, enter -0- in column (f)."

You get to this result in different ways, depending on your software. Some programs provide a worksheet for sale of home, others may have a code or checkbox for the transaction. Otherwise use a simple override.