I have the same situation - I used my primary residence as a rental, recovered possession of it, and got sued in 2016. I sold it in 2017. And then entered a negotiated settlement in 2018 where I paid a lot of money. I'm trying to follow your instructions, but the software won't allow me to enter a 0 profit sale in the section "Less Common Business Situations - Sale of Business Property - Sales of Business or Rental Property that you haven't already reported". I put the original acquisition date of the property, then for Date Sold I put the date of settlement, sales price 0, and Cost (tax basis) as the amount of settlement plus attorney's fees, and 0 depreciation. But then it says it did not make a gain, and wants to remove it. This is the Home and Business version. Please step me through the exact place to put this.
