Short sale

  1. You have chosen to ignore posts from nikkojuno. Show nikkojuno's posts

    Short sale

    I had a short sale on my primary home in 2013. I received a debt cancellation(1099-C)

    of 52K. Does Massachusetts consider this as income and is it taxable?

     
  2. You have chosen to ignore posts from MSCPA2008. Show MSCPA2008's posts

    Re: Short sale

    In response to nikkojuno's comment:

    I had a short sale on my primary home in 2013. I received a debt cancellation(1099-C)

    of 52K. Does Massachusetts consider this as income and is it taxable?

     

    Dear nikkojuno:

    Unfortunately, Massachusetts does not always follow federal rules.  This is one of those times.

    For Federal purposes, you should use a Form 982 to report the amount cancelled and claim the exclusion for a principla residence (this will reduce the basis of your property BEFORE you report the sale in your return).  You may then apply the principal residence exclusion of either $ 250,000 or $ 500,000 (depending on your filing status and your qualification to claim it).

    Massachusetts "locks" its individual tax provisions the federal tax provisions in a particular year.  The year it is currently locked into predates the exclusion provision reltated to the principal residence debt exclusion.  You will have to report the cancellation as ordinary income for your Massachusetts return and use the adjusted cost basis of the home, without reducion for the excluded debt, to compute your Massachusetts gain on the sale of the residence.  You may then claim the exclusion for sale of a principal residence against the resulting state gain, if any, if and to the extent that you qualify to claim otherwise claim the exclusion on sale of a residence for federal purposes.

    Hope this helps in preparing your returns!

    Mark H. Misselbeck, C.P.A., M.S.T.

    Tax Principal, Katz, Nannis + Solomon, P.C.

     
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  4. You have chosen to ignore posts from donaldwatson015. Show donaldwatson015's posts

    Re: Short sale

    I agree it was taxable and i experience it too when i am a real estate agent in Finland but right now i am into safety measure things at http://www.tapaturva.fi/ and i did not yet seen some case like this since when i was start doing it.

     
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