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cn575
Returning Member

Capital gain net Loss Carry Forward

A corporation bought its first property, a vacant lot (#1) in 2015 for $200K, and vacant lot #2 in 2018 for $500K. These properties don't generate any income; therefore, as of 2020, the corporation has $120K in retained earnings (combined loss from these 2 properties).

 

On 1/1/ 2021, vacant lot #2 was sold for $620K.

 

Lot #2 sales price $620K - $500K purchase price = $120K gain from sales of lot #2

Can the gain from sales of lot #2 (120K) be net off with loss carry forward ($120K) so that the corporation has no capital gain in 2021?

 

 

 

 

 

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2 Replies

Capital gain net Loss Carry Forward

we don't have sufficient information. is this a C Corp or S Corp?  what was the purpose of buying the properties?   some of those losses/expenses possibly should have been added to the tax basis of the properties or maybe the expenses need to be allocated between the properties.  

cn575
Returning Member

Capital gain net Loss Carry Forward

This is a C corp. Buying the vacant lots  for investments with the intention to sell them to the right investment. The accumulated losses are from property taxes and lot maintenance. 

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