title>Tax Guru-Ker$tetter Letter Wizard Animation

                 

Tax Guru-Ker$tetter Letter
Sunday, April 17, 2005
 

Q:

Subject: forfeited $12,200 by withdrawing from RE purchase
 
Dear Tax Guru,
 
My 92 yr old dad put up $12,200 in May 2003 to buy a house but decided to withdraw from the purchase in March 2004 and forfeited the $12,200 -- how does he claim the loss for tax purposes?

 

A:

 It depends on what kind of property it was for.  There is a long standing double standard in our tax code that losses on personal property are not deductible, while profits on them are taxable.

On the other hand, if the house was being acquired to be used for rental or investment purposes, the loss would be deductible on Schedule D (investment) or Form 4797 (rental).

If the loss qualifies as deductible, it should be claimed on your father's 2004 1040, since that is when the deposit became worthless.

Good luck.  I hope this helps.

Kerry Kerstetter

 


- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 4/17/2005 06:57:00 PM Send this post:

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