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You should receive a 1099-C for the forgiven loan amount. This will be included in your gross income. To enter in your desktop version, in
your open return, type '1099-c' in
the Find box, then select 'Jump to 1099-c' link.
For the disposition of your rental, you will have a gain/loss depending on the sale proceeds from the short sale and your adjusted basis. See Disposition of rental on a Short Sale from TurboTaxDeeS for an example calculation. Enter the disposition in the Rental section.
IRS links for reference:
https://www.irs.gov/taxtopics/tc431
https://www.irs.gov/pub/irs-pdf/p4681.pdf
I believe my llc qualifies for an exception from cancellation of debt for business real property. have you ever filled out the form 982? We had a condo that was rented and sold in a short sale in 2019. please help
You can elect to exclude canceled qualified real property business indebtedness from income.
The conditions required it are listed in IRS Publication 4681 on page 8.
Some of the conditions of the debt are are:
The TurboTax Home and Business version supports Form 982 in Forms mode.
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