Unfortunately only the IRS and the court will determine if the abandonment meets the requirements of Section 165. This is a highly contested area. If you have an opinion from an attorney that in their opinion it meets the requirements, then they should be able to advise you as to how to report this on your tax return. I believe this should be reported on form 4797. But be advised, depending on the size of the ordinary loss you are claiming, don't be surprised if you win the audit lottery.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
