We short sold our rental property in March 2012. The loan was non-recourse, and we received a 1099c with a debt discharged of $50,000. The property's fair market value was listed as $0, and we are insolvent for the full amount of the discharged debt. The property's basis was $160,000 with $7000 in depreciation, totaling $153,000. The property short sold for $140,000. Do we still apply the debt discharged to the basis of the house, bringing the total to $103,000, and would this show a capital gain of $37,000 that needs to be listed as income? Or does the insolvency completely remove the $50,000 from our tax liability?

August 30th, 2024

When can we start deducting expenses incurred during the startup phase of constructing a preschool? We have been constructing for the last 2 years and are nearly done. We have incurred several expenses, including loan interest and utilities. What criteria must be met for realizing these expenses? Is getting an occupancy permit sufficient, or should the business be up and running?

September 4th, 2024

How can I ask a US bank to take a 10% withholding on interest payments from US sources, as per the US-Australia tax treaty, when I am a US and Australian citizen living permanently in Australia?

September 7th, 2023

My friend asked me to open a Schwab account with $25,000 he entrusted me with while he was in prison. The investment has grown to $50,000. Now that he's out, I want to transfer the money to him. Are there any tax consequences if I transfer $50,000 to him?

October 27th, 2024

I have an installment sale for the sale of a partnership interest. The total price is $800,000 payable over 10 years, with no stated interest. I will report this using the installment method and impute interest. However, I'm unsure if section 483 (unstated interest) or section 1274 (OID) applies to impute the interest, as mentioned in IRS Publication 537, page 12. Which section applies?

September 23rd, 2024