LOSS VALUATION - COST OF REPAIRS METHOD FAQs
The IRS has
addressed some thorny issues related to disaster casualty losses in a quick
manner using the concept of “FAQa” or Frequently Asked Questions.
Here are 13 that appear on the IRS
website. At present they are available at:
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/FAQs-for-Disaster-Victims-Casualty-Loss-%28Valuations-and-Sections-165-%28i%29%29
This web URL
is the current one at this time (January 2013). It changed recently.
Some of these
FAQs are very useful and many clear up issues related to small groups of
taxpayers that are sometimes overlooked as the audience is small.
In some cases
the IRS response is very important to large groups of taxpayers. Search this
blog for the following entry:
VERY IMPORTANT! - ABSOLUTE REQUIREMENT
FOR USING THE COST OF REPAIRS METHOD OF
COMPUTING LOSS
(ANOTHER REASON FOR NOT USING THE COST OF
REPAIRS METHOD
IN LARGE DISASTER LOSSES)
The titles in
bolded RED at the top of each question are
additions supplied by the author of the blog.
IRS Frequently Asked
Questions, Casualty Loss (Valuations and Sections 165(i))
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IRS ADMITS THAT CASUALTY LOSS REPORTING
IS DEFECULT
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(6/1/07) Q: A number of concerns have been raised by
taxpayers and tax professionals about casualty loss valuations. While the IRS
continues to research and develop specific answers to these issues, general
guidance follows below.
A: While we
cannot address every question received about property valuation issues, the
IRS wants to express to the public that we sincerely recognize the
extraordinary damage that can be caused by disasters. We urge taxpayers and
tax professionals to act in good faith and make reasonable estimations based
on all information available. The IRS is committed to considering each
situation on a case-by-case basis. We have extensive experience with disaster
situations and will be reasonable in determinations.
As for lost records, when records are not
available or it is not feasible to obtain documentation sufficient to
re-create records otherwise required, the IRS will consider documentation
requirements satisfied by the best reasonably available information presented
in good faith.
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COMPUTATION OF REAL ESTATE PROPERTY
CASUALTY LOSS DEDUCTIONS
USING THE COST OF REPAIRS METHOD AS THE
MEASUR OF DETERMINING THE LOSS
BUT SEE:
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(6/1/07) Q: The reporting of casualty losses on Form 4684
is cumbersome when using the repairs as evidence of the loss. You must reduce
the value of the property after the loss by the amount of the repairs paid
out to get the form to compute correctly.
A: Under
the law, a personal casualty loss is determined by taking the smaller of:
·
The cost
or other basis of the property (reduced by any insurance reimbursement), or
·
The
decline in fair market value of the property as measured immediately before
and after the casualty (reduced by any insurance reimbursement).
The cost of repairs may, in certain cases, be used to
measure the decline in fair market value, but it cannot be used by itself to
determine the amount of the loss. When the cost of repairs is determined to
be a fair measure of the decline in fair market value, then all you have to
do is take the fair market value before the casualty and reduce it by the
cost of repairs to arrive at the fair market value after the casualty.
Suggestions for redesign of the form to make the
computation less cumbersome and still follow the law are welcome and may be
submitted at the Comments on Tax Forms and Publications page, or you may
write to: Internal Revenue Service, Individual Forms and Publications Branch,
SE:W:CAR:MP:T:I, 1111 Constitution Ave. NW IR 6406, Washington, DC 20224.
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FAIR MARKET VALUE IMMEDIATELY AFTER
LOSS EVENT
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(6/1/07) Q: Section 1.165-7(b)(1)(i) indicates the decrease in fair market value is the
difference between the property's value immediately before and immediately
after the casualty. What constitutes "immediately after"?
A: To
compute the deductible casualty loss, taxpayers need to determine: (1) the
difference between the fair market value immediately before and immediately
after the casualty; and (2) the adjusted basis of the property (usually the
cost of the property and improvements). Taxpayers may deduct the smaller of
these two amounts minus insurance or any other form of compensation received
or expected to be received. One method of determining the decrease in fair
market value is an appraisal. An appraisal must reflect only the physical
damage to the property and not a general decline in the property's fair
market value. See §1.165-7(a)(2)(i) of the Income Tax Regulations. Taxpayers may also use the cost
to repair or clean up the property (cost-of-repairs method) to determine the
decrease in fair market value caused by the casualty. See §1.165-7(a)(2)(ii).
Although the regulations use the term "immediately
after" when referring to the post-casualty value, we recognize that
taxpayers' ability to determine the decrease in the fair market values of
their properties, as a result of a disaster, may be restricted by lack of
access to the properties and the need to remove water from flooded
properties. Under these circumstances, the decrease in fair market value
would take into account additional damage sustained to the property as a
result of delays due to legal and physical restrictions to taxpayers' access
to their property and the need to remove standing water from the properties.
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MULTIPLE PROPERTIES LOST IN A SINGLE
DISASTER
ELECTION TO REPORT LOSS ON PRIOR YEAR
RETURN
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(03/09) Q: If a taxpayer owns several parcels of real
estate that are damaged by a federally declared disaster, may the taxpayer
elect under §165(i) to claim a casualty loss on one property in the prior year and
a casualty loss on other property in the current year?
A: If a taxpayer
elects under §165(i) to deduct in the prior tax year
losses attributable to a federally declared disaster, the taxpayer must
report all related losses that qualify for the election on the prior year tax
return (original or amended). See §1.165-11(d) of the Income Tax Regulations.
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COMMON OWNERSHIP INTERESTS
CONDOS AND CO-OPS
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(6/1/07) Q: A homeowners/condo association sustained a
loss from a disaster and made a special assessment on owners to replace
uninsured property. May the homeowners claim the special assessment as a
casualty loss?
A: The
answer depends on whether the damaged property was owned by the homeowners
association or by the individual members as tenants in common.
A homeowners association (including a condominium
association) is organized and operated for the purpose of acquiring,
constructing, managing, and maintaining "association property."
Such property includes real and personal property owned by the organization
or owned as tenants in common by the members of the organization. This
property is generally referred to as "common elements."
Funds for performance of the activities of the homeowners
association are generally derived from assessments of the members and the
assessments include real property taxes on association property as well as
reserves for capital items such as resurfacing a parking lot, replacement of
street lights, construction of a swimming pool, etc. This would include
special assessments for any uninsured portion of the cost of repair or
replacement of property damaged by a natural disaster.
A casualty loss deduction is only allowed for losses from
property owned by the taxpayer. If the common elements are not owned by
individual members, but rather by the homeowners association, an individual
member would not be entitled to a casualty loss deduction. A member's
assessment for the replacement of a capital item, whether or not the item was
damaged by a casualty, is in the nature of a contribution to the capital of
the homeowners association and is not currently deductible by the member.
However, if the individual members of the homeowners
association own the common elements as tenants in common, the individual
members may be entitled to casualty loss deductions in proportion to each
member's interest in the damaged common elements.
To compute the amount of a casualty loss, a taxpayer must
determine the fair market value of the property both immediately before and
immediately after the casualty and compare the decrease in fair market value
with the adjusted basis in the property. From the smaller of these two
amounts, a taxpayer must subtract any insurance or other form of compensation
they have received or reasonably expect to receive. Fair market value may be
determined by an appraisal. The cost to repair or clean up the property
(cost-of-repairs method) may also be used as a measure of the decrease in
fair market value caused by the casualty if the repairs are actually made,
are not excessive, are necessary to bring the property back to its condition
before the casualty, take care of the damage only, and do not cause the
property to be worth more than before the casualty. See Regulations §1.165-7(a)(2).
If the members own the common elements damaged by the
casualty as tenants in common, they are entitled to a casualty loss deduction
for the lesser of: (1) the decline in value of their ownership interest as a
result of the casualty or (2) their adjusted basis. From the smaller amount,
the member should subtract any insurance or other form of compensation
received or expected to be received. With respect to a member claiming the
special assessment as a casualty loss, a member could use the amount of the
assessment as a measure of the decrease in the fair market value of the
common elements caused by the casualty as long as the amount of the
assessment is commensurate with the member's ownership interest in the common
elements and the requirements for using the cost-of-repairs method of
valuation, described above, are satisfied.
In summary, if the common elements are owned by the
homeowners association, the members are not entitled to any casualty loss
deduction for damage to the common elements and, therefore, the members may
not deduct a special assessment to replace uninsured property (common
elements) damaged by a disaster. However, if the common elements are owned by
the members of the homeowners association as tenants in common, the members
may be entitled to a casualty loss deduction as discussed above.
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LOSSES TO LANDSCAPING ONLY
OR OTHER “SINGLE ELEMENT”
APPRAISAL ISSUES – LOSS CALCULATION
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(6/1/07) Q: How does a taxpayer determine a casualty loss
from damaged trees and other landscaping on personal-use residential property
when that loss is attributable to a disaster?
A: In
determining the amount of a casualty loss from damage to personal-use
residential property, trees and other landscaping are considered part of the
entire residential property, and are not valued separately or assigned a
separate basis, even if purchased separately.
To compute your casualty loss:
1.
Determine
your adjusted basis in the entire residential property before the casualty.
Your basis is generally the cost of the property, adjusted for improvements
and certain other events. For more information on determining your adjusted
basis, see Publication 530, Tax information for First-Time Homeowners, and Publication 551, Basis of Assets.
2.
Determine
the decrease in fair market value of the entire residential property as a
result of the casualty.
3.
From the
smaller of these two amounts, subtract insurance and any other form of
compensation received or expected to be received.
For residential property, damaged and destroyed trees and
other landscaping may adversely affect the fair market value of the entire
property by reducing the curb or overall appeal of the property.
One method of determining the decrease in fair market value
is to compare an appraisal of the entire residential property, including
trees and other landscaping, before the damage caused by the casualty to an
appraisal of the entire residential property after the damage caused by the
casualty, including damage to trees and other landscaping. Valuation of the
damage to a tree by an arborist does not determine the decrease in fair
market value of the entire property.
Alternatively, the cost of cleaning up and restoring the
residential property, including trees and other landscaping, to its condition
before the casualty may be used as evidence of the decrease in fair market
value, if the clean-up, repairs, and restoration are actually done, are not
excessive, are necessary to bring the property back to its condition before
the casualty, take care of the damage only, and do not cause the property to
be worth more than before the casualty. For example, if these requirements
are satisfied, the cost of removing destroyed or damaged trees (minus any
salvage received), pruning and other measures taken to preserve damaged
trees, and replanting necessary to restore the property to its approximate
value before the casualty may be acceptable as evidence of the decrease in
fair market value caused by the casualty. You may not include in your cost of
cleaning up and restoring your property the cost of purchasing any capital
asset, such as a compact loader or tractor, or the value of the time you
spend cleaning up your own property.
The following examples illustrate the points discussed
above:
Example 1: A taxpayer lost a large tree in her backyard due to a disaster,
but sustained no other property damage. An arborist valued the damage to the
tree at $3,000. The taxpayer spent $600 to remove the tree from the yard and
grind the stump. Insurance paid $500 for debris removal.
The value of the damage to the tree determined by the
arborist does not qualify as a measure of the casualty loss because it does
not reflect the decrease in the fair market value of the residential property
as a whole, including the residence, land, and improvements. The taxpayer may
obtain an appraisal of the entire property to determine any decrease in value
resulting from the loss the tree.
Alternatively, the taxpayer may use costs incurred to
clean up and to remove the tree as a measure of the decrease in the fair
market value of the property provided the costs are not excessive, are
necessary to bring the property back to its condition before the casualty,
take care of the damage only, and do not cause the property to be worth more
than before the casualty. The taxpayer would subtract from the loss any
insurance reimbursement for tree removal and clean-up expenses. Under this
alternative, the taxpayer has a casualty loss of $100.
Example 2: A taxpayer had a large tree that fell during a disaster and
crushed a carport. Among many trees on the property, it was the only tree
that was damaged. The loss of this tree does not affect the fair market value
of the entire property. Homeowners’ insurance reimbursed the taxpayer all
costs for repairing the carport and removing the tree.
Insurance paid for all repair costs to bring the property
back to its pre-casualty condition and value. Therefore, the taxpayer has no
casualty loss.
For more information on casualty losses, see Publication 547, Casualties, Disasters & Thefts.
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LOSSES FULLY INSURED
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(6/1/07) Q: A taxpayer's residence is damaged by a
disaster. Prior to the disaster the taxpayer's basis in the property was $100,000.
The taxpayer receives insurance proceeds of $10,000 for the damage (not for
living expenses), but only spends $7,500 for repairs necessary to restore the
residence to its condition before the hurricane. The taxpayer receives no
other form of compensation for the damage. Does the taxpayer have a casualty
loss deduction? Is the difference of $2,500 between the insurance recovery
and the repair cost taxable? What is the adjusted basis of the residence
after the repairs?
A: The
taxpayer does not have a casualty loss deduction, because the loss is fully
covered by insurance. To compute a casualty loss deduction, a person must:
1.
Determine
the adjusted basis in the property before the casualty.
2.
Determine
the decrease in fair market value of the property as a result of the casualty
(generally by appraisal or using the cost-of-repairs method).
3.
From the
smaller of these two amounts, subtract insurance and any other form of
compensation received or expected to be received.
See Publication 547, Casualties, Disasters, and Thefts. In this case, using the
cost-of-repairs method to measure the decrease in value caused by the
hurricane, the taxpayer sustained a casualty loss of $7,500—the lesser of the
$100,000 basis in the residence and the $7,500 cost of repairs. However,
since the $10,000 in insurance exceeds the casualty loss, the taxpayer may
not claim a casualty loss deduction on the taxpayer's federal income tax
return.
The mere fact that the insurance proceeds exceed the cost
of repairs does not in and of itself result in taxable income to the
taxpayer. Any gain from a casualty is determined by the amount of insurance
proceeds and any other form of compensation received or expected to be
received in excess of the amount of the taxpayer's adjusted basis in the
damaged property prior to the casualty. In this example, the taxpayer would
not recognize any gain because the amount of the insurance proceeds is less
than the taxpayer's pre-disaster basis in the residence.
To determine the new basis in the residence, the taxpayer
adjusts the pre-disaster basis by taking into account adjustments that
decrease basis and adjustments that increase basis. Casualty loss deductions
and compensation for the damage (for example, insurance proceeds) both
decrease basis. See Publication 551, Basis of Assets, page 5. Note, however, that in this case the
taxpayer does not have an allowable casualty loss deduction, so the casualty
loss does not affect the taxpayer's basis. The $10,000 insurance payment
reduces the taxpayer's basis in the residence. The $7,500 spent on repairs to
restore the residence to its condition before the disaster increases the
taxpayer's basis in the residence. Thus, in this situation, the taxpayer's
new basis of the residence is the taxpayer's pre-disaster basis reduced by
the $2,500 difference between the insurance proceeds received and the cost to
repair the damage, and is computed as follows:
New Basis Calculation
Basis before casualty
$100,000
Less casualty loss deduction 0
Less insurance received
$ 10,000
Net basis calculation
$ 90,000
Plus repairs
$
7,500
Basis after casualty
$ 97,500
For more information on computing adjusted basis, see Publication 530, Tax information for First-Time Homeowners.
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MOLD LOSSES
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(6/1/07) Q: How will the IRS handle water damage
"mold issues" as a result of insufficient repairs or whatever the
cause. Will there be special reporting on the loss related to mold?
A: Whether
individuals may claim damage to their personal-use property from mold as part
of a casualty loss depends on the facts and circumstances of each situation.
A key factor to consider is whether the mold damage occurred as a direct
result of the disaster or from some other intervening cause since there must
be a causal connection between the casualty event and the loss claimed by the
taxpayer. For example, individuals would not be entitled to deduct as part of
their casualty loss mold damage that occurred as a result of insufficient
repairs. The individuals' casualty loss deduction would be limited to the
property damage caused by the disaster. In addition, if a large amount of
time lapsed between the date of the hurricanes and the formation of the mold,
this raises the question of whether the mold damage was caused by the
disaster or by some other factor.
The formation of mold may qualify as a separate casualty.
A casualty is an event that is identifiable, damaging to property, and
sudden, unexpected, and unusual in nature. An event is sudden if it is swift
and precipitous, and not gradual or due to progressive deterioration of
property through a steadily operating cause. An event is unexpected if it is
unanticipated and it occurs without the intent of the one who suffers the
loss. An event is unusual if it is extraordinary and nonrecurring, one that
does not commonly occur during the activity in which the taxpayer was engaged
when the destruction or damage occurred and one that does not commonly occur in
the ordinary course of day-to-day living of the taxpayer. If, under a
particular set of facts, the formation of mold is a sudden, unexpected,
unusual and identifiable event that caused damage to the individual's
property, then it would qualify as a casualty and the individual may be
entitled to deduct the loss for the resulting property damage as a casualty
loss under section 165(c)(3) if the individual satisfies the other requirements for the
deduction.
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BUSINESS LOSSES ARE DIFFERENT FROM
PERSONAL LOSSES
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(11/03/2006) Q: A business building has adjusted basis of
$40,000 ($30,000 building and $10,000 land). Building in 50% destroyed.
Insurance is $10,000. Cost to repair is $85,000. What is the amount of the
taxpayer’s casualty loss deduction?
A: If the business
property was damaged but not totally destroyed, the casualty loss is measured
by the lesser of the adjusted basis or the decrease in fair market value,
minus any other form of compensation (such as insurance reimbursement). Section 1.165-7(a)(2) of the Income Tax Regulations provides two methods for
taxpayers to determine the decrease in fair market value of the property
affected by a casualty. The first method is an appraisal. An appraisal must
reflect only the physical damage to the property and not a general decline in
the property’s fair market value. See §1.165-7(a)(2)(i). The second method is the cost to repair the property. See §1.165-7(a)(2)(ii).
The cost to repair the damaged property may be used as evidence of the
decrease in value if the taxpayer makes the repairs and shows that the
repairs: a. are necessary to bring the property back to its condition before
the casualty; b. the amount spent for repairs is not excessive; c. the
repairs take care of the damage only; and d. the value of the property after
the repairs is not, as a result of the repairs, more than the value of the
property before the casualty.
Since the property is used in a trade or business, the
casualty loss deduction must be computed based on each single identifiable
property based on §1.165-7(b)(2)(i). Therefore, the taxpayer must compute the loss deduction with
respect to the building separately. If the taxpayer satisfies all of the
requirements for the cost of repairs method, then the casualty loss would be
measured by comparing the decrease in fair market value (as evidenced by the
cost of repairs) to the adjusted basis of the building. The casualty loss
with respect to the building would be the lesser of the decrease in fair
market value of the building or the adjusted basis of the building, reduced
by insurance compensation. The deductible casualty loss for the building
would be $20,000, computed by using $30,000, which is the lesser of the decrease
in fair market value of the building ($85,000) (we are assuming that the
$85,000 reflects only the cost to repair the building) or the adjusted basis
of the building ($30,000) and subtracting from $30,000 the insurance payment
of $10,000 (assuming that the $10,000 insurance compensation covered the loss
of the building only).
The casualty loss must be computed separately for any
other improvements to the property.
·
What is
the taxpayer’s basis in the building?
Response: The taxpayer’s basis in the damaged building is
reduced by the amount of the insurance proceeds received and the amount of
the allowable casualty loss deduction attributable to the damaged building.
·
If the
taxpayer repairs the partially destroyed building, how do the repair costs
affect the computation of the taxpayer’s basis in the building?
Response: If the taxpayer repairs the damaged building,
the cost of the repairs ordinarily is capitalized and added to the taxpayer’s
tax basis in the damaged building.
·
What is
the authority for the basis information described above?
Response: Sections 1012 and 1016 of the Internal Revenue Code.Section 1012
provides, generally, that the basis of property is its cost to the taxpayer. Section 1016 requires that proper adjustment be made to the basis of
property for expenses, receipts, losses, or other items properly chargeable
to capital account.
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IRS DOES NOT HAVE AN AUDIT GUIDE FOR
PREPARING FOR AN AUDIT!
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(12/15/09) Q. Is there an audit technique guide to assist
in the preparation of casualty losses?
A: No, but
there is other IRS-issued guidance to help taxpayers determine and report
disaster-related casualty losses. See, Publication 584, Casualty, Disaster and Theft Loss Workbook. Also see, Internal
Revenue Manual Section 4.10.7.3, Evaluating Evidence, and Section 4.10.7.4,
Arriving at Conclusions.
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VERY IMPORTANT! - ABSOLUTE REQUIREMENT
FOR USING THE COST OF REPAIRS METHOD OF
COMPUTING LOSS
(ANOTHER REASON FOR NOT USING THE COST
OF REPAIRS METHOD
IN LARGE DISASTER LOSSES)
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(12/15/09) Q. According to Treas. Reg. 1.165-7(a)(2)(ii), the cost of making repairs to restore property to its
original condition can be used as a measure of the decrease in the FMV of the
property. If the repairs have not yet been made but the taxpayer received an
estimated cost of the repairs, can the taxpayer report the estimated cost on
the taxpayer’s return.
A: No. To
be able to use the cost of repairs method to determine the decrease in FMV of
a property, the repairs must have been made by the due date of the tax
return. If the repairs have not been made, the taxpayer should file the
return without reporting the casualty loss information. After the repairs
have been made, the taxpayer may file an amended return.
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SAY GOOD BYE TO THE “RED INK”
INDICATION OF THE DISASTER
AT THE TOP OF YOUR TAX RETURN
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(12/15/09) Q. Previously, taxpayers who were affected by a
federally declared disaster were instructed to write, in red ink, at the top
of the Form 1040, information that identifies the particular disaster. Today,
many taxpayers file electronically. Taxpayers who file electronically cannot
enter information in “red ink” on the Form 1040. Is it acceptable that
taxpayers who file electronically identify the disaster in “black ink” at the
top of the Form 1040?
A: It is
acceptable to put a statement in black ink at the top of the Form 1040.
However, the Federal Emergency Management Agency (FEMA) notifies the IRS of
the counties affected by a federally declared disaster. By entering the
FEMA-supplied information into its computers, the IRS can systemically identify
affected taxpayers. Only those affected taxpayers who are required to self
identify (because their principal residence is not located in the covered
disaster area) are required to enter information identifying the disaster on
the Form 1040.
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INSURANCE COMPANY “FLAT AMOUNT”
PAYMENTS FOR FOOD SPOILAGE
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(12/15/09) Q. During a recent disaster many taxpayers lost
food stored in refrigerators and freezers due to long periods without
electricity. Many insurance companies reimbursed policyholders a flat amount
for food losses, without requiring the policyholders to itemize the food
losses or file claims. If the amount the taxpayer received from the insurance
company exceeded the original cost of the food, does the taxpayer have a
reportable gain?
A: No. Section 1033(h)(1)(A)(i) of the Code states that no gain shall be recognized by
reason of the receipt of any insurance proceeds for personal property which
was part of such contents and which was not scheduled property for purposes
of such insurance.
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USING THE AMOUNT REPORTED ON YOUR
PROPERTY TAX BILL AS A MEASURE OF THE FAIR MARKET VALUE OF YOUR PROPERTY
NOT A VALID MEASURE OF FAIR MARKET
VALUE FOR CASUALTY LOSS COMPUTATIONS
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(12/15/09) Q. Can an affected taxpayer use the value of
their property as stated their most recent property tax statement to
establish the FMV of the property before the casualty?
A: No. The
law allows the taxpayer to establish the FMV of the property before the
casualty by either: (1) obtaining an appraisal from a competent appraiser
(see Reg. 1.165-7(a)(2)(i)); or (2) by using the cost of repairs method (see Reg. 1.165-7(a)(2)(ii)). The IRS will review each return based on the particular
facts and circumstances.
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MAJOR LOSS TO OCEAN FRONT RENTAL
WHEN TO REPORT INSURANCE PROCEEDS GAIN
WHAT ABOUT “SUSPENDED PASSIVE LOSSES?”
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(12/15/09) Q. Taxpayer's beach front rental property was
totally destroyed as a result of a hurricane that occurred in 2008. The
taxpayer then decided not to rebuild. After the hurricane, the County Tax
Assessor valued the property at $100. The taxpayer received insurance
proceeds in 2009 that resulted in a gain. The taxpayer, who had been
reporting income and expenses on Schedule E, has suspended losses. Is the
taxpayer required to report the gain in 2008 or 2009? Is the taxpayer
required to consider the property as disposed of and take the suspended
losses? If so, are these losses reported on the 2008 or 2009 return?
A: The gain
that results from the casualty must be reported in the year in which the
insurance proceeds were received. Therefore, in the example above, the
taxpayer should report the gain in 2009. See IRS Notice 90-21, 1990-1 C.B. 332. Pursuant to section 469(g) of the Code, losses are allowed, without limitation, if the taxpayer
disposes of the entire interest in the activity to an unrelated person in a
fully taxable transaction. Generally, this rule does not apply unless the
taxpayer disposes of all of the assets used in the activity (including land).
Because the taxpayer in the example above has not disposed of the land, the
taxpayer may only take passive activity losses up to the amount of the
taxpayer's passive income in 2008. Any suspended losses not allowed would
carryover to 2009.
Page Last Reviewed or Updated: October 18, 2012
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All rights to reproduce or quote any part of the chapter in any
other publication are reserved by the author. Republication rights limited by
the publisher of the book in which this chapter appears also apply.
JOHN TRAPANI
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Certified
Public Accountant
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2975
E. Hillcrest Drive #403
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Thousand
Oaks, CA 91362
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 (805)
497-4411 E-mail John@TrapaniCPA.com |
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Website: www.TrapaniCPA.com
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Blog:
www.AccountantForDisasteRrecovery.com
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It
All Adds Up For
You
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This material was contributed by John Trapani. A Certified
Public Accountant who has assisted taxpayers since 1976, in analyzing and
reporting transactions of the type covered in this material.
Internal Revenue Service Circular 230
Disclosure
This is a general discussion of tax law. The
application of the law to specific facts may involve aspects that are not
identical to the situations presented in this material. Relying on this
material does not qualify as tax advice for purpose of mounting a defense of a
tax position with the taxing authorities
The analysis of the tax consequences of any
event is based on tax laws in effect at the time of the event.
This material was completed on the date of the posting
© 2, John Trapani, CPA,
