Did you receive a Form 1099-S from the closing agent for more than $250,000?
If you don't get a Form 1099-S, there is no reason to report the sale on your tax return. if it was for more than $250,000 and you get a 1099-S report it. The IRS will likely send a notice and bill because it will assume the entire sales process was the gain (it assumes zero cost). If you report it for federal you'll probably need to file in Hawaii though there would be no tax. You also have the option of not filing in Hawaii and waiting to see if they send you a notice. Then you will need to respond.
the loss is not deductible so if you report it use adjustment code L
